Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SHOREHAM HARBOUR BILL

DARTFORD TUNNEL BILL

As amended, considered; to be read the Third time.

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL

As amended, to be considered upon Thursday.

Oral Answers to Questions — PENSIONS AND NATIONAL INSURANCE

Retirement Pensioners

Mr. Gourlay: asked the Minister of Pensions and National Insurance if he will state the number of retirement pensioners in receipt of an allowance from the National Assistance Board on the latest available date.

Mr. Ledger: asked the Minister of Pensions and National Insurance if he will state the number of retirement pensioners in receipt of a weekly payment from the National Assistance Board at the most recent available date; and how this compares with the number of such payments made in the last week in April, 1961.

The Minister of Pensions and National Insurance (Mr. Boyd-Carpenter): The number of National Assistance supplements to retirement pension is ascertained quarterly. It was 1,061,000 at the end of March. 1962, compared with 1,079,000 a year before. The number at the end of April, 1961, is not known, but it is estimated to have been about

1,050,000 earlier in that month, immediately after the increased pension rates came into force. Some of the supplements provide for the requirements of a household with more than one pensioner.

Mr. Gourlay: Is the Minister aware that the increase in the number of people receiving assistance between April last year and April this year indicates the great urgency of the need to increase pensions? Will he tell the House whether he has taken the opportunity of advising his right hon. and learned Friend the Chancellor of the Exchequer that today's Budget would be a very opportune time to give the old-age pensioners an increase?

Mr. Boyd-Carpenter: The difficulty about that argument would hypotheticallay be that the figures that I have read out indicate that the firm figures taken a year apart show a reduction in the number of cases on supplement.

Mr. Gourlay: While it is true that there has been a reduction from the figures immediately before the increase, has there not been an increase of 11,000 during the period, which indicates that the present pensions are insufficient?

Mr. Boyd-Carpenter: I think that is a very flimsy basis on which to found so substantial a structure. In point of fact, as the hon. Gentleman knows perfectly well, the number of supplementary cases has remained remarkably constant over the years and is, in fact, dependent entirely on the relationship between the two scales of benefit.

Mr. Houghton: How much longer will the Government allow National Assistance to continue its disproportionate part in our scheme of social security? Is it not a disgrace to our social security system that well over 1 million retirement pensioners still have to have a supplement on a needs basis?

Mr. Boyd-Carpenter: The figures which I gave indicate a percentage of 22·7. If that is a disproportionate proportion, it is a little interesting to note that it is exactly the same as it was in 1951.

Mr. Gourlay: asked the Minister of Pensions and National Insurance how many pensioners in the area served by


the Board's Office in Kirkcaldy are in receipt of a supplementary allowance from the National Assistance Board; and what was the corresponding figure for April. 1961.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mrs. Margaret Thatcher): As my right hon. Friend explained in answer to the hon. Gentleman's earlier Question, the number of National Assistance supplements to retirement pension is ascertained quarterly and is not available for the month of April. In the area served by the National Assistance Board's office in Kirkcaldy, it was 2,717 at the end of March, 1962, and 2,691 at the end of March, 1961.

Mr. Gourlay: Is the Minister aware that despite the fact that the name of "National Assistance" has been changed to "supplementary allowance" on the pension, it is still very distasteful for many people to have to apply to the Board for supplementation of their pension, and will he not agree that this is an appropriate time to make an increase in the basic pension?

Mrs. Thatcher: I think that the figures for Kirkcaldy show that that particular office has done a good deal to overcome people's reluctance to apply for National Assistance. I would not agree with the hon. Gentleman's reasoning that because 23 out of 100 retirement pensioners are in need of supplementation the other 77 should all have an increase in their basic pensions.

Mrs. Slater: asked the Minister of Pensions and National Insurance what proportion of retirement pensioners were in receipt of weekly allowances from the National Assistance Board at the latest available date; and what was the average weekly payment.

Mr. Boyd-Carpenter: At the end of 1961, 22·7 per cent. and 19s. 5d.

Mrs. Slater: Does the right hon. Gentleman think that this is a very satisfactory state of affairs? I suppose he will argue that because the percentage may be low the need is not there. Now that this social welfare service is lagging behind those of other countries, is it not time that the Government had another look at it so that they can meet

the needs of these people, particularly in view of the rise in the cost of living?

Mr. Boyd-Carpenter: I cannot accept that because the National Assistance Board does its duty in paying these supplements this constitutes evidence that our social services are lagging behind anybody else's.

Mr. Hannan: asked the Minister of Pensions and National Insurance what was the number of retirement pensioners in the areas served by the Glasgow offices at the latest available date; how many of such pensioners were in receipt of supplementary allowances; and what percentage they are of the total.

Mrs. Thatcher: Statistics relating to the numbers of retirement pensioners are not available for particular areas, and it follows that it is not possible to state the percentage of pensions supplemented by National Assistance. The number of supplements at the end of March, 1962, in the area served by the National Assistance Board's offices in Glasgow, was 24,400.

Mr. Hannan: Does the hon. Lady recognise from these figures that a very high proportion of these pensioners are now seeking National Assistance in addition to the pension? Will not she recognise that she will be guilty of self-deception if she believes that these increased numbers are due to the better posters which are being displayed in public places? The figures show instead a real need. Will she increase the pension immediately?

Mrs. Thatcher: The fact that the National Assistance Board is there does, in fact, meet the need. The hon. Gentleman may be interested to know that there are now 1,000 fewer people drawing National Assistance in Glasgow than at the equivalent time last year.

Mr. Lawson: Is the hon. Lady aware that a recent study sponsored by the Nuffield Institute showed that, on average, half as many people again should be in receipt of National Assistance but are not applying for it? Is she further aware that this would mean another 10 per cent. to be added to the existing 23 per cent. of those receiving assistance?

Mrs. Thatcher: That conclusion is not accepted by the National Assistance Board. It was the result of interviewing


some 500 people and drawing conclusions relating to nearly 7 million retirement pensioners. That means equating every one person to some 14,000. It is notoriously difficult to interview people about their sources of income. The hon. Gentleman will be interested to know that the person who was persuaded to appear before the television cameras as being typical of those too proud to apply for National Assistance had been drawing it for two years.

Mr. Lawson: On a point of order.

Mr. Speaker: Order. There is so much noise that it is becoming difficult to transact our business. The hon. Member for Motherwell (Mr. Lawson) was addressing me on some topic.

Mr. Lawson: On a point of order, Mr. Speaker. In view of the misleading statement made by the hon. Lady, I beg to give notice that I shall raise this matter on the Adjournment at the earliest opportunity.

Mr. J. Robertson: asked the Minister of Pensions and National Insurance how many retirement pensioners in the area served by the National Assistance Board's offices in Paisley are in receipt of a weekly supplement to their pension: and whether the numbers of such cases show an increasing or decreasing trend over the past six months.

Mrs. Thatcher: In the area served by the National Assistance Board's office in Paisley, the number of National Assistance supplements to retirement pension at the end of March, 1962, was 3,287. In six months to that date the number had increased by four.

Mr. Robertson: I have not the slighthest idea what that reply was.

Mr. Speaker: Order. The House is defeating its own business by its loquacity. I ask the assistance of hon. Members in making less noise. Will the hon. Lady be good enough to repeat the Answer?

Mrs. Thatcher: In the area served by the National Assistance Board's office in Paisley, the number of National Assistance supplements to retirement pension at the end of March, 1962, was 3,287. In six months to that date the number had increased by four.

Mrs. Cullen: asked the Minister of Pensions and National Insurance how many retirement pensioners in Scotland were in receipt of a weekly supplement from the National Assistance Board at the latest available date.

Mrs. Thatcher: At the end of March, 1962, the number of National Assistance supplements to retirement pensioners in Scotland was 81,855.

Mrs. Cullen: Will the Minister consider increasing the rate of pensions and reducing the number of people relying on the National Assistance Board?

Mrs. Thatcher: To increase the rate of pension would not help those who are on National Assistance but those who are already above the National Assistance scale.

Mr. Ross: Perhaps, therefore, the Minister or his Parliamentary Secretary can tell us why the last time they increased the pension they did not increase National Assistance by the same amount, with the result that those who according to the formula are in greatest need got least help, and that that help has already disappeared because of rising prices.

Mrs. Thatcher: The hon. Member will be aware that the main National Assistance increase was in September, 1959, when retirement pension rates did not move at all. If one takes the 1959 and 1961 increases in National Assistance together, they are greater than the increase in retirement pension between 1958 and 1961. They are 8s. 6d. in National Assistance scale for a single person and 14s. for a married couple, as against 7s. 6d. and 12s. 6d., respectively, in retirement pension.

Mr. Ross: Does the hon. Lady appreciate that that is quite irrelevant to what happened in April last year, when people got an increase in pension of 12s. 6d. but the National Assistance scales for a married couple rose by only 5s., which was all the benefit that those in greatest need got on that occasion?

Mrs. Thatcher: My answer was not irrelevant. The irrelevancy existed in the hon. Member's mind.

Unemployment Benefit

Mr. Fernyhough: asked the Minister of Pensions and National Insurance how many unemployed persons were unable to draw unemployment benefit, under the 12-day rule, for those days, namely, 5th February and 5th March, on which one-day strikes took place in the engineering and shipbuilding industries.

Mr. Boyd-Carpenter: I understand that the hon. Gentleman has in mind people laid off before the dates mentioned and unable to draw unemployment benefit for those days as a result of decisions by the independent adjudicating authorities under the trade dispute disqualification. On that basis the figures are 348 and 682, respectively I understand that 154 further claims have not yet been decided.

Mr. Fernyhough: Does not the right hon. Gentleman think it scandalous that unemployed men who are already carrying a heavy enough cross should be denied unemployment benefit through circumstances over which they have no control? Is he not aware that the regulation is more than 25 years old and that, however we may have treated the unemployed 25 years ago, the social conscience will not stand for their being treated in this manner today? Will he please not tell me that the Labour Government continued this regulation in the 1948 Act. Does he not think it time that the regulation was removed?

Mr. Boyd-Carpenter: All Governments, as the hon. Gentleman has reminded the House, have accepted the principle that unemployment benefit should not be payable to those laid off as a result of a trade dispute, and I think that is a principle that has been very generally accepted for a very long time.

Mr. Fernyhough: As the right hon. Gentleman knows, the men to whom I was referring were not laid off as a result of a trade dispute. They had been unemployed from a week to ten days before the dispute began. In those circumstances, would it not be harsh and unjust to prevent the men from getting the benefit to which they are entitled?

Mr. Boyd-Carpenter: That may be the hon. Gentleman's view, but it was not the view of the independent authorities

to which the House has entrusted adjudication in these cases.

Mr. Fernyhough: asked the Minister of Pensions and National Insurance how many unemployed people registered at the Jarrow and Hebburn Employment Exchange were unable to draw unemployment benefit for those days, namely 5th February and 5th March, on which one-day strikes took place in the engineering and shipbuilding industries.

Mr. Boyd-Carpenter: I regret that the figures asked for by the hon. Gentleman are not available. But, on the basis of my Answer to his preceding Question, the figures would be 11 and 4, respectively.

Mr. Fernyhough: Is the right hon. Gentleman saying that he is going to continue with this regulation? is he not prepared to look at it? Does he not understand how much bitterness and distress it causes, and does he not think it is time that the regulation was completely removed?

Mr. Boyd-Carpenter: The trade dispute disqualification does sometimes, as the hon. Gentleman knows, give rise to difficulties, but experience has shown that the general principle behind it, under which my Department remains impartial in a trade dispute, is the right line to follow.

Graduated Pensions Scheme

Mr. McKay: asked the Minister of Pensions and National Insurance what, on the basis of the report of the Government Actuary in Command Paper 629, he estimates to be the income in the financial year 2001–2 from the graduated contributions from employers and insured persons by the 4¼ per cent. deduction from wages and other incomes over £9 a week and below £15 a week; what he estimates to be the payment for graduated pensions for that year and the balance arising; and what that balance would be if the contributions were 3 per cent. and 2 per cent., respectively, on the assumption that graduated pension accounts were kept separately.

Mr. Boyd-Carpenter: The hon. Gentleman appears to have overlooked that the figures quoted in Command Paper 629 were brought up to date in Tables II and IV of the Appendix to


Command Paper 1197. I would prefer at present riot further to anticipate my report on the finances of the National Insurance Fund for the year 2001–2002.

Mr. McKay: I appreciate that the Minister does not look forward to the year 2001, but as Minister of Pensions and one who is responsible for a very big Government Department he has to look forward a long way on many occasions. My point is that he started a new scheme and introduced this method of contribution for a certain section of graduated payment and he is now using the whole of the money to help pay the pensions for other people. Does he not think it time that he looked at the whole subject and considered breaking the pay pause for the aged?

Mr. Boyd-Carpenter: I fully share the hon. Gentleman's interest in the future of the scheme, and I am sure he will be reassured to know that, contrary to the position which existed before the 1959 Act, the prospects of solvency of the scheme right forward look good.

Retired Senior Officers (Unemployment Benefit)

Mr. Marten: asked the Minister of Pensions and National Insurance whether he will take steps to prevent retired senior officers, who are drawing full pension from the State, from simultaneously drawing unemployment benefit.

Mr. Boyd-Carpenter: No. Sir. If they satisfy all the conditions for unemployment benefit, including availability for suitable work, I do not think it would be right to introduce a means test to deprive this particular class of the benefit for which they have contributed.

Mr. Marten: While recognising that these people are quite within the law in drawing unemployment benefit, does the Minister not agree that it is a slight moral abuse of unemployment benefit that they should be drawing a sizeable State pension at the same time as they are drawing unemployment benefit?

Mr. Boyd-Carpenter: No, Sir. Provided that the man concerned is available for and accepts suitable work when offered, I think it is right to treat him as one treats all other contributors to the Fund.

Students and Trainees

Mr. G. M. Thomson: asked the Minister of Pensions and National Insurance if he will introduce legislation to allow full-time students and approved trainees over the age of 18 to be credited with National Insurance contributions during their period of study.

Mr. Boyd-Carpenter: No, Sir.

Mr. Thomson: In view of the need for an increased pool of educated manpower, does the Minister not think that this burden on students is unfair? Will the Government reconsider this in the light of the recommendations of the Anderson Report?

Mr. Boyd-Carpenter: This goes a good deal wider than my responsibility. All that I am concerned about in this matter is that I myself do not think that it would be right to subsidise students at the cost of the other contributors to the Fund.

Disabled Children

Mr. G. M. Thomson: asked the Minister of Pensions and National Insurance if he will take steps to extend the provisions of the National Insurance and Family Allowances Acts to allow benefit to be paid to children who are completely disabled and who continue to be dependent on their parents beyond the age of 18 years.

Mr. Boyd-Carpenter: No, Sir. Extensions of the age limits for allowances for children under these schemes were made by amending legislation in 1956 and last year, and I have no proposals for a further extension. Young people above the age of 16 are, of course, eligible to apply for National Assistance in their own right.

Mr. Thomson: Does not the right hon. Gentleman have on his files a number of cases of very real hardship where people in these circumstances are chronic invalids, imbeciles and so on? Will he look at this matter again and make his regulations more humane than they are at the moment?

Mr. Boyd-Carpenter: I think that they are humane, and I do not think that we should make them more humane by pretending that somebody is a child if he is not

Maternity Benefit

Mr. J. Wells: asked the Minister of Pensions and National Insurance if he will take steps to alter the National Insurance (Maternity Benefit) Regulations to enable benefits to be paid as for a home confinement when the mother is in hospital for under 48 hours.

Mr. Boyd-Carpenter: In the circumstances described in the Question, a maternity grant of £14 is payable and a home confinement grant of £6 may also be payable if the mother has been admitted to hospital as an emergency case. I think this is pretty reasonable.

Mr. Wells: Is my right hon. Friend aware that many young mothers go to hospital voluntarily for only a very short stay and are turned out far too quickly because of the present shortage of maternity beds? Their confinement in hospital was a long-standing arrangement and therefore the benefit which my right hon. Friend outlines in his main answer is not available. Will he look at this again and draw the attention of his right hon. Friend the Minister of Health to the grave shortage of maternity beds due to the pay and conditions of nurses and midwives?

Mr. Boyd-Carpenter: I am aware of the case to which my hon. Friend refers and which, as he says, also concerns my right hon. Friend. The importance of the home confinement grant is that it is paid in addition to the maternity grant itself to compensate in some measure for the expense of a confinement at home. When the confinement takes place in hospital by long pre-arrangement it is outside the scope of this additional grant.

Personal Case

Mr. T. Fraser: asked the Minister of Pensions and National Insurance, if he aware of the hardship caused to Mr. James Deans, 38, Albert Drive, Larkhall, Lanarkshire, a disabled ex-miner, by his being denied unemployment benefit under the Seasonal Workers Regulations; and if he will amend the regulations to exclude this class of worker from their provisions.

Mr. Boyd-Carpenter: I have been into this case, in which, as the hon. Member knows, this gentleman's appeal was dismissed

by the National Insurance Commissioner. In view, however, of the other benefits now being received by him, I cannot accept that this has resulted in hardship, and my answer to the last part of the Question is No, Sir.

Mr. Fraser: Will the right hon. Gentleman have another look at this case? Here is a man who has been in regular employment and paid insurance contributions for nearly 50 years, but because of his disability and the high level of unemployment in the area in which he resides it has not been possible for the Minister of Labour to offer him any kind of employment, and because on his own initiative he has found employment in the summer months he is being penalised by having his unemployment benefit withheld in the winter months?

Mr. Boyd-Carpenter: The hon. Gentleman said that in his letter to my hon. Friend, but I am afraid that it is wrong. The gentleman in question improved his position in respect of unemployment benefit by the work he did, otherwise he would have been out of benefit as this is not a benefit of indeterminate duration. I do not want, unless I am pressed, to give the figures as to what this gentleman is getting, but he is not doing too badly.

Mr. Fraser: As the right hon. Gentleman is not prepared to give the figures, I beg to give notice that I shall raise the matter on the Adjournment.

Prescription Charges (Glasgow)

Mr. Hannan: asked the Minister of Pensions and National Insurance how many retirement pensioners in the areas served by the National Assistance Board's offices in the City of Glasgow were granted refunds of prescription charges in the 12 months up to the latest convenient date; and what was the cost of such refunds to the Board.

Mrs. Thatcher: I regret that this information is not available.

Overseas Employment (Industrial Injuries)

Mr. J. Silverman: asked the Minister of Pensions and National Insurance whether he will introduce early legislation to amend the First Schedule of the National Insurance (Industrial Injuries)


Act, 1946, to extend insurable employment to employment under any contract of service entered into in this country in all cases where that employment is carried out temporarily abroad, on a ship on the high seas or on any aircraft.

Mr. Boyd-Carpenter: No, Sir. Persons ordinarily resident in the United Kingdom who are employed as seamen or airmen on British ships or aircraft are already insured under the National Insurance (Industrial Injuries) Act in respect of their employment outside this country, and there is also cover for British nationals who, while working for employers here, are temporarily in a country with which we have a reciprocal agreement. Further extension of such cover is, in my view, best obtained by extension of our system of reciprocal agreements.

Mr. Silverman: In view of the fact that we are endeavouring to increase our exports, which means sending workers and technicians abroad, is it not desirable that the provisions of the Act should be extended to cover such people, particularly as their numbers are likely to increase?

Mr. Boyd-Carpenter: I am afraid that, although there is force in the hon. Gentleman's argument, it is not practicable to extend the cover of this Act to countries which, because they have no system of industrial injuries insurance, do not and cannot provide us with the means of checking and investigating claims.

Mr. Speaker: I must ask the House to forgive me and allow me to go back. In the midst of the din I failed to see that the hon. Member for Dagenham (Mr. Parker) was present and wished to ask his Question No. 21. Mr. Parker.

Mr. Parker: rose—

Mr. Manuel: On a point of order, Mr. Speaker. A little belatedly I shouted "Question No. 19". I also have Question No. 20 on the Order Paper.

Mr. Speaker: There are limits. I was looking with the greatest appreciation at the hon. Member for Central Ayrshire (Mr. Manuel) and I called his name at least three times. Receiving no response, I felt it my duty, in the general interest, to move on.

Mr. Manuel: Further to that point of order, Mr. Speaker. I did rise and shout "Question No. 19"—although belatedly. But the next Question, Question No. 20, was not called. Even had I not been present to call Question No. 19, I might have come in and have been in my place in time to call Question No. 20.

Mr. Speaker: I am sorry. I have stated that I called the hon. Gentleman's name at least three times, but receiving no response, I did not call the other Question in his name.

Education Allowances

Mr. Parker: asked the Minister of Pensions and National Insurance whether he will introduce legislation to permit the continued payment of the school allowance for a child of a widow until the end of the school year in which he is 18.

Mr. Boyd-Carpenter: I think the hon. Member has either family allowances or National Insurance dependency benefits in mind, since education maintenance grants are not a matter for me. I have no proposals for a further upward extension of the age of entitlement for these allowances.

Mr. Parker: Does the right hon. Gentleman think it right that a widow should have financial difficulty when her child is taking the G.C.E. A level?

Mr. Boyd-Carpenter: The hon. Gentleman sent me particulars of a case, which I read with interest. But that type of case seems to be much more one for the local education authorities through a maintenance grant than for the extension of family allowances.

Industrial Injuries

Mr. J. Silverman: asked the Minister of Pensions and National Insurance whether he will introduce early legislation to ensure that any employed person who is not provided with insurance cover by the National Insurance (Industrial Injuries) Act, 1946, only by virtue of the fact that he is temporarily employed abroad, on the high seas or on an aircraft shall be able to obtain a rebate of that part of his National Insurance contributions that relates to industrial injuries insurance.

Mr. Boyd-Carpenter: No, Sir. We already do better than that. People not covered for industrial injuries because of employment outside the United Kingdom are not required to pay industrial injuries contributions at all.

Mr. Silverman: When a person is temporarily employed outside the United Kingdom, is he informed that he is entitled to this rebate?

Mr. Boyd-Carpenter: There is another Question on the Order Paper relating to information in respect of people abroad which I will, if I may, answer when we come to it.

Retirement Pension and Earnings

Mr. Ross: asked the Minister of Pensions and National Insurance if he will state the difference between the average weekly earnings of a male worker and the retirement pension payable in respect of husband and wife at the most recent available date; and if he will give the same figures for October, 1951, October. 1955. and October. 1959. respectively.

Mr. Boyd-Carpenter: On the basis of the Ministry of Labour's half-yearly earnings inquiries, the difference between the standard rate of retirement pension for a couple and the average level of earnings for men amounted to 69·9 per cent of earnings in 1961. The figure for 1951 is the same, and for 1955 and 1959 70·8 and 70·5 per cent., respectively.

Mr. Ross: Will the right hon. Gentleman translate these figures for these respective periods into £s, shillings and pence?

Mr. Boyd-Carpenter: No, Sir—not at any rate by way of lightning calculation in the absence of my computer.

Mr. Ross: I would have thought that it would have been very much easier, since these figures were originally in £s, shillings and pence, for the Minister to have given them like that. Has he not got this information with him?

Mr. Boyd-Carpenter: Whatever the hon. Gentleman may have thought, I have answered the Question which he put on the Order Paper.

Mr. Ross: The Question I put on the Order Paper is there to be read. I asked what the difference was. I did not ask for any percentage. Will he now answer the Question?

Mr. Boyd-Carpenter: I have already done so, and I have sufficient regard for the hon. Gentleman's mathematical ability to have little doubt of his power to translate the figures.

National Insurance Fund

Mr. Ross: asked the Minister of Pensions and National Insurance if he will state the estimated aggregate increases of income to the National Insurance Fund for 1962–63 compared with 1950–51 in respect of flat rate contributions and graduated contributions, respectively.

Mr. Boyd-Carpenter: Some £413 million. There were, of course, no graduated contributions in 1950–51; the income from these contributions in 1962–63 is estimated to be about £174 million.

Mr. Lawson: asked the Minister of Pensions and National Insurance if he will estimate the increased sums to be paid into the National Insurance Fund in 1962–63 in respect of employees, employers, and the Exchequer, respectively.

Mr. Boyd-Carpenter: About £469 million in respect of insured persons, £478 million in respect of employers and £190 million in respect of the Exchequer.

Mr. Lawson: This is a ratio of about 8 to 1. Does it not suggest that the Treasury is wriggling out of its obligations in this matter? In view of the fact that retiral pensions take up more than 70 per cent. of the total amount paid in benefits and retiral pensions are not now on an insurance basis, will not the Minister consider greatly increasing the Exchequer contribution to these funds?

Mr. Boyd-Carpenter: No, Sir. If the hon. Member, who I know is interested in the figures, likes to look at them, he will see that the Exchequer contribution has gone up in all 82 per cent. since 1951–52, whereas the employee's own Class I contribution has gone up 80 per cent.

Reciprocal Agreements

Mr. Malcolm MacMillan: asked the Minister of Pensions and National Insurance with which foreign countries there is in force an agreement providing for reciprocity in matters relating to the payment of compensation or benefit to employed persons in respect of industrial or similar injuries under the provisions of Section 85 of the National Insurance (Industrial Injuries) Act, 1946.

Mr. Boyd-Carpenter: Belgium, Denmark, the Federal Republic of Germany, Finland, France, Israel, Italy, Luxembourg, Netherlands, Norway, Sweden, Switzerland, Turkey, and Yugoslavia.

Mr. MacMillan: In view of the rapidly growing number of British citizens who have to work abroad and the increasing number of visits made because of easier air transport and so on, does not the Minister agree that we should be making a little more progress in this direction? Will he assure us that everything is being done to keep up with the increasing tempo of visiting abroad and the expansion of British industry and the consequent employment of more British citizens abroad?

Mr. Boyd-Carpenter: I fully share the hon. Gentleman's feelings on this point. The difficulty is that there are comparatively few countries other than those I named in my Answer which have comparable provision of their own for industrial injuries.

Mr. Malcolm MacMillan: asked the Minister of Pensions and National Insurance with which of Her Majesty's Colonies there is in force an agreement providing for reciprocity in matters relating to the payment of compensation or benefit to employed persons in respect of industrial or similar injuries under the provisions of Sections 85 of the National Insurance (Industrial Injuries) Act, 1946.

Mr. Rankin: asked the Minister of Pensions and National Insurance with how many of Her Majesty's overseas territories he has agreements providing for reciprocity in matters relating to the payment of compensation or benefit to employed persons in respect of industrial and similar injuries under the provisions of Section 85 of the National Insurance (Industrial Injuries) Act, 1941

Mr. Boyd-Carpenter: We have such agreements with Malta, Jersey and the Isle of Man.

Mr. MacMillan: In view of the fact that we have been able to establish reciprocal arrangements with so many foreign countries, does not the Minister agree that, having regard to our more direct responsibility and greater influence in the Colonies, we should be able by now to have complete coverage in British colonial areas? Will he assure us that everything is being done in that direction?

Mr. Boyd-Carpenter: The difficulty is the one that I gave the hon. Gentleman a moment ago. One cannot have a reciprocal agreement with countries which do not have industrial injuries arrangements and that is the reason why, for instance, our National Insurance reciprocal agreements with Canada, Australia and New Zealand have no industrial injuries provisions.

Mr. Rankin: In view of the importance of these reciprocal agreements to British workers and others, could not the Minister impress upon Commonwealth countries the importance we attach to them and urge them to undertake such legislation?

Mr. Boyd-Carpenter: I do not think that it is part of my job to suggest amendments in other people's social services.

Mr. Lipton: Is the Minister aware that whereas he has reciprocal arrangements with Jersey there is no such reciprocal arrangement with Guernsey, which is causing a certain amount of hardship and dissatisfaction?

Mr. Boyd-Carpenter: I will not repeat to the hon. Gentleman the explanation which I have already twice given.

Mr. Diamond: asked the Minster of Pensions and National Insurance if he will take steps to inform employed persons who are likely to be employed temporarily abroad, and their employers, with which foreign countries and with which of Her Majesty's Dominions and Colonies there is not in force an agreement providing for reciprocity in matters relating to the payment of compensation or benefit to employed persons in respect


of industrial or similar injuries under the provisions of Section 85 of the National Insurance (Industrial Injuries) Act, 1946.

Mr. Boyd-Carpenter: A general leaflet explaining the insurance position of people who are abroad, and particular leaflets dealing with our arrangements with particular countries, can be obtained from National Insurance offices. I am sending the hon. Member a copy of these. There is also a clear explanation of the position in the Employer's Guide to National Insurance Contributions.

Mr. Diamond: Does the leaflet explain precisely which countries are covered for reciprocal purposes and which are not, so that the employer may, as the Minister has suggested, advise his employee that he will not be covered in certain places and requires, therefore, to be insured by his employer?

Mr. Boyd-Carpenter: There is, as I said, a general leaflet and then a particular one covering each country with which we have a reciprocal arrangement. I do not think that employers need find any difficulty at all.

Mr. S. Silverman: Is not the right hon. Gentleman's explanation about lack of reciprocity a little misleading? Is not he suggesting that in those countries with which we cannot make agreements there is no provision for industrial injuries compensation, whereas the true position is that we have transferred that liability to the national social security scheme, and the other countries which have not done so have legislation similar to that which we had before the National Insurance Act? It is not a case of our people not being entitled to any such compensation in these other countries but only that they get it under different legislation. Does not the basis for reciprocity, therefore, exist?

Mr. Boyd-Carpenter: I do not think that the hon. Gentleman has got it quite right. There is not a basis for reciprocity unless there is a State scheme covering industrial injuries. The difficulty is that some countries have no such scheme. Some deal with cases simply under their general social security system and others still have a workmen's compensation set-up.

Mr. Rankin: asked the Minister of Pensions and National Insurance what representations he has made to those foreign Governments, with whom agreement has not already been reached, with a view to obtaining an agreement providing for reciprocity in matters relating to the payment of compensation or benefit to employed persons in respect of injuries under the provisions of Section 85 of the National Insurance (Industrial Injuries) Act. 1941.

Mr. Boyd-Carpenter: We already have reciprocal agreements with most of the countries which have industrial injury provisions comparable with our own, and to which people from this country are likely to go in the course of their employment. But I take this opportunity of repeating that we are keen to conclude further such agreements when opportunity arises.

Mr. Rankin: Can the Minister say how many countries in the Common Market have not industrial injuries cover for those who may be injured or killed by accidents?

Mr. Boyd-Carpenter: I gave the list of countries with which we have agreements a few minutes ago. I have nothing to add to that.

National Assistance

Mr. Houghton: asked the Minister of Pensions and National Insurance in how many cases applicants for National Assistance have had disregards limited to 30s. a week under the regulations.

Mr. Boyd-Carpenter: I regret that figures are not available, but I have no reason to believe that the number is other than small.

Mr. Houghton: Has not the time come to reconsider this maximum? I have in mind a disabled soldier with severe facial injuries who comes up against the maximum of 30s. disregards. It seems very hard that compensation for very severe injury should limit the amount he receives from National Assistance.

Mr. Boyd-Carpenter: As the hon. Gentleman will remember, we had a very full discussion about this when we increased the disregards two years ago. The difficulty is that if one takes them


much further one more and more separates the payment of Assistance from actual need.

Mr. Houghton: asked the Minister of Pensions and National Insurance what were the average weekly amounts of discretionary additions to National Assistance payments for special diets, laundry, cost of domestic help, and exceptional fuel requirements, respectively, during 1961 or the last available year; and what were the main items covered by other special needs referred to in Reports of the National Assistance Board.

Mr. Boyd-Carpenter: The average amounts of discretionary additions included in assessments of weekly National Assistance allowances current at the end of 1961 were, for special diets 7s.; for laundry 2s. 6d.; for the cost of domestic help 3s. 6d.; and for exceptional fuel requirements 4s. 6d. The other items are too varied for classification.

Mr. G. Thomas: asked the Minister of Pensions and National Insurance what was the number of people in Wales in receipt of National Assistance in 1951, 1955, 1960, and at the nearest convenient date, respectively.

Mrs. Thatcher: The figures for March in 1951, 1955, 1960 and 1962 were, respectively, 114,474. 140,520, 135,293 and 136,019

Mr. Thomas: Does the hon. Lady realise that, disturbing as those figures are, if the Ministry were to reassess the basis of need, as it ought in view of rising costs, the figures would be doubled? What does she propose to do to meet the need which the Assistance Board is not covering in cases like this?

Mrs. Thatcher: As the hon. Gentleman knows, the National Assistance scales have been increased eight times since the inception of the scheme and the disqualifications for receiving it have been progressively relaxed. These changes, of course, are reflected in the increased National Assistance Board scales, and, on top of those, there are increases for rent which do not need revision by regulation.

Mr. Boyden: asked the Minister of Pensions and National Insurance if he will outline the factors leading to the

estimated increase of £4 million by the National Assistance Board in 1962–63 in expenditure on assistance grants, etc.

Mr. Boyd-Carpenter: Largely the cumulative effect of increases in rent and rates, and a further increase in the number and average amounts of discretionary additions.

Mr. Boyden: Is not the Minister's attitude to this whole problem deplorably complacent, since in answer to an earlier Question he was satisfied to have the same number of applicants for National Assistance? Is it not time that he wanted to reduce the number considerably without reducing the benefits?

Mr. Boyd-Carpenter: The hon. Member must know perfectly well that it is the increase in the National Assistance scales that increases the eligibility for National Assistance.

Mr. Manuel: Why does not the Minister stick up for his Department? Why is he allowing it to featherbed other Departments? Welfare foods, rents and rate increases are now being carried by National Assistance payments. Is the Minister aware that many landlords are being subsidised straight from the Treasury instead of from statutory payments from householders?

Mr. Boyd-Carpenter: I not only stick up for my Department: I keep awake and stand up for it.

Mrs. Braddock: asked the Minister of Pensions and National Insurance how many of the recipients of a weekly supplement from the National Assistance Board are women; and how many of these are over 70 years of age.

Mr. Boyd-Carpenter: At the end of 1961, the number of women among the recipients of weekly National Assistance allowances was 1,226,000. They included 646,000 aged 70 or over. These figures include women not in receipt of any National Insurance benefit.

Mrs. Braddock: When the circus on the benches opposite is quiet, I will be able to ask my supplementary question. In view of the fact that so many of these people are women over the age of 70, will the Minister arrange that the whole of these cases are reviewed to ensure that


the people are in receipt of an income that gives them some sort of a decent standard of living?

Mr. Boyd-Carpenter: As I think the hon. Lady knows, the National Assistance Board is particularly careful to look into the question of discretionary allowances in the case of older people, with the result that a discretionary allowance was paid in two-thirds of the cases where an Assistance grant was paid in supplementation of a retirement pension.

Mrs. Braddock: asked the Minister of Pensions and National Insurance how many retirement pensioners in Liverpool are now in receipt of a weekly assistance supplement; and how many such applicants for assistance were turned down in the first three months of this year.

Mrs. Thatcher: In the area covered by the National Assistance Board's offices which serve the City of Liverpool, and also some places outside it, the number of National Assistance supplements to retirement pension at the end of March, 1962, was 24,047. I regret that the information asked for in the second part of the Question is not available.

Mrs. Braddock: Will the Parliamentary Secretary obtain the information? I am told that there are difficulties about people being turned down because their income is just at the level of the full-scale of National Assistance. When the question of payment for a prescription arises, difficulties are created because of that fact and because the total amount that the person has is just on the level of the National Assistance total.

Mrs. Thatcher: We do not keep figures of particular kinds of applicants or of the number of applications that are turned down. The best answer that I can give to the latter part of the hon. Lady's Question is to say that in the first 14 weeks of this year, there were 40,765 applications all told, of which 3,907 did not receive any grant.

Mrs. Cullen: asked the Minister of Pensions and National Insurance how many unemployed persons in Glasgow are in receipt of a weekly allowance from the National Assistance Board; and how many of these have been in receipt of such payment for three months or more.

Mrs. Thatcher: The number of authorisations providing for the payment of a weekly National Assistance allowance to a person registering for work which were current at the end of March, 1962, in the National Assistance Board's offices in Glasgow was 10,720. I regret that the information asked for in the second part of the Question is not available.

Mrs. Cullen: Does not this prove that the present rate of benefit is totally inadequate as an insurance against unemployment?

Mrs. Thatcher: No, Sir.

Mr. Small: asked the Minister of Pensions and National Insurance how many pensioners in receipt of a weekly allowance from the National Assistance Board in Scotland are tenants of local authority houses; and what is the average weekly allowance in respect of rent.

Mrs. Thatcher: At the end of 1961, the number of retirement pensioners receiving weekly national assistance allowances in Scotland who were tenants of local authorities was about 38,000 and the average amount of rent paid by them was 19s. 4d. a week.

Mr. Small: As there will shortly be rent increases arising out of the Scottish Housing Bill, which is now going through the House, can I have an assurance that the people mentioned in the Question will receive the maximum protection from the National Assistance Board?

Mrs. Thatcher: Increases in rent and rates have so far been fully taken into account by the National Assistance Board.

Dr. Dickson Mabon: asked the Minister of Pensions and National Insurance how many retirement pensioners in Greenock and district were receiving a weekly supplement at the latest available date; and what was the average amount of these supplements.

Mrs. Thatcher: In the area served by the National Assistance Board's office in Greenock, which extends considerably beyond the Burgh, the number of National Assistance supplements to


retirement pension at the end of March, 1962, was 1,862. I regret that the information asked for in the second part of the Question is not available.

Dr. Mabon: Is the hon. Lady aware that while we appreciate the work of the officials of the National Assistance Board, there are very few hon. Members—and I am certainly not one of them—who are satisfied with the level of supplementation given to old-age pensioners? Since her right hon. Friend has refused to make representations to the Chancellor of the Exchequer about increasing pensions, will the hon. Lady make representations to increase the scale of National Assistance allowances for these people?

Mrs. Thatcher: I understand that constitutionally the initiative is with the Chairman of the National Assistance Board.

Mr. Dempsey: asked the Minister of Pensions and National Insurance what was the nature of his reply to the representations recently made by the National Assistance Board for an increase in National Assistance scales.

Mr. Boyd-Carpenter: I have received no such representations.

Mr. Dempsey: Is the Minister aware that there is considerable disquiet among some of the National Assistance Board advisory committees about the present rate of allowance being no longer realistic because of the increasing cost of living? Does not the right hon. Gentleman agree that even potatoes will soon be outwith the pocket of the old-age pensioner because of rising prices? Will he consider introducing a realistic scale to give to pensioners and other recipients of National Assistance the strength in purchasing power which they had last year?

Mr. Boyd-Carpenter: I am perfectly certain that the House can be confident that the National Assistance Board, which includes among its members former hon. Members from both sides of the House, is in close touch with the situation and will act rightly in the future as in the past.

Mr. Ellis Smith: Does not the right hon. Gentleman agree that in the past Ministers of all parties have asked the Chairman and other members of the

Board to give sympathetic consideration to the need for increasing the scale? Does he not agree that the time has arrived when he should consider making such a request?

Mr. Boyd-Carpenter: I have no idea what Ministers in the past have done.

Mr. Houghton: Will the right hon. Gentleman kindly tell the House whether the initiative rests with the National Assistance Board, or whether it makes representations to the Minister only when it is satisfied that he will receive them favourably? Where does the initiative lie? Who takes the decisions? Or is it a cook-up between the Board and the Minister?

Mr. Boyd-Carpenter: In the terms of the National Assistance Act, 1948, the House itself placed the initiative on the Board.

Mrs. Castle: Has the right hon. Gentleman intimated to the Chairman of the Board that he would favourably consider any representations made to him for an increase?

Mr. Boyd-Carpenter: The Chairman of the Board and I have many very interesting conversations.

National Insurance Advisory Committee (Report)

Mr. J. Robertson: asked the Minister of Pensions and National Insurance when he expects to receive the report from the National Insurance Advisory Committee on the question of credits, during periods of unemployment, for seasonal workers.

Mr. Boyd-Carpenter: Shortly.

Mr. Robertson: Will the Minister bear in mind that it is some time since the matter was discussed in the Committee, and will he take steps to see that there is no undue delay?

Mr. Boyd-Carpenter: The matter was considered by the National Insurance Advisory Committee fairly recently. I hope to have its report before long.

National Health Service Contributions

Mr. Lawson: asked the Minister of Pensions and National Insurance how much of the £163 million which will be


collected by the National Health Service contribution in 1962–63 is attributable to last year's increase in this contribution.

Mr. Boyd-Carpenter: About £49 million.

Mr. Lawson: In view of this quite small amount of money when we are talking in terms of thousands of millions, will not the Minister take steps to ask his right hon. Friend the Minister of Health to see whether the distress caused by collecting this money could not be got rid of and medicine made a free service?

Mr. Boyd-Carpenter: I am sure that this money is very well spent on the expansion of the Health Service which my right hon. Friend is undertaking.

Refunds

Mr. Boyden: asked the Minister of Pensions and National Insurance if he will explain the estimated increases of £50,000 and £300,000 in refunds of overpayments, and recoveries from arrears of pensions, etc., respectively, in respect of National Assistance grants, etc., in 1962–63.

Mr. Boyd-Carpenter: The Estimate figures for these receipts for the current year are approximately the same as the actual out-turn for 1961–62. The latter exceeded the estimate no doubt largely as result of the increases in National Insurance and National Assistance benefits in April, 1961.

Mr. Boyden: Can the Minister be quite sure that he has not issued harsher instructions to his officer to press people who may make mistakes? Can he also be sure that it is not due to inefficiency in some offices?

Mr. Boyd-Carpenter: No, Sir. If the hon. Member studies my original reply, he will see that the figures are the same as the actual out-turn for last year.

Oral Answers to Questions — COAL

Injured Miners (Claims for Damages)

Mr. Abse: asked the Minister of Power whether he is aware of the en-croachment made upon rights of injured

miners to claim damages following upon the decision of Brown v. the National Coal Board; and whether he will introduce legislation to place an absolute duty upon mine managers to ensure that roads and working places in mines are made and left secure.

The Minister of Power (Mr. Richard Wood): I am aware of the decision to which the hon. Member refers, but I do not think it warrants my introducing the legislation he suggests.

Mr. Abse: Is the Minister aware that the effect of this decision is to revert the law by some eighty years and that it has caused serious concern to the miners in South Wales? Is it not necessary for some action to be taken in order that they can be sure that they can have no less protection underground than factory workers have in a factory?

Mr. Wood: I do not think that under present legislation miners have less protection than they had before. The question is whether it should be an absolute liability, but whether it was or not would make no difference so long as Section 157 of the Mines and Quarries Act, 1954, provides as it does for the management.

Oral Answers to Questions — MINISTRY OF POWER

Shale Oil Industry

Mr. J. Hill: asked the Minister of Power, in view of the decision of Scottish Oils Limited to close the shale mines in the Lothians, what steps he proposes to take, other than by way of subsidy, to preserve this source of supply of indigenous oil.

Mr. Wood: I do not think any action is called for on my part.

Mr. Hill: Is the Minister aware that a year ago the late Member for West Lothian and I were promised by the Financial Secretary to the Treasury that the Government were taking steps to try to assist the shale oil industry other than by subsidy? Is this the way they intend to assist it—by closing it down?

Mr. Wood: As the hon. Gentleman knows, this is a matter for the company.
He will know the background to why preference has been removed and why, as I announced last week, the Government do not feel that they should replace the preference with a subsidy.

Mr. Hill: At the same time, 1,000 men are to lose their jobs within six weeks, while nothing is being done to find them jobs elsewhere. Should not something be done about that situation?

Mr. Wood: I believe that the hon. Gentleman has Questions to my right hon. Friends on that matter, and no doubt he will get answers in due course.

Mr. Lawson: In view of the hundreds of millions of £s being spent on subsidising farming, should not some little assistance be given to the shale oil industry, which is so important in my hon. Friend's constituency?

Mr. Wood: That is not a matter for me.

Mr. T. Fraser: Is it not a matter for the right hon. Gentleman to take steps to preserve the sources of supply of an indigenous oil?

Mr. Wood: It would be a matter for me to take steps if I were convinced that the use of this indigenous fuel were so important that it could not possibly be dispensed with, but, as the hon. Gentleman knows, it represents only a very small part of our needs, and I do not think that this is, therefore, a matter in which I can intervene.

Dr. Dickson Mabon: While this industry may be only very small nationally, does it not represent a very important part of the economy of Scotland? As the amount of money involved is so small, could not some way be found to keep this industry going, at least for the next ten years in order to accommodate the men who have preserved it for fifty years? Should not the matter be given second consideration?

Mr. Wood: It would not be right to take special measures to keep this industry going unless it could clearly be shown that it could produce its products at reasonably economic rates.

Oral Answers to Questions — HOSPITALS

Hospital Plan (Nursing Staff)

Mr. Wade: asked the Minister of Health if he is satisfied that there will be adequate nursing staff available to staff new hospitals as and when they are completed under the Hospital Plan and if he will make a statement.

Mr. Manuel: On a point of order—

Mr. Wade: On a point of order—

Mr. Speaker: I am being addressed on a point of order, and I have not heard a part of it yet.

Mr. Manuel: My point of order—

Mr. Wade: On a point of order—

Mr. Speaker: I cannot hear more than one point of order at once.

Mr. Manuel: You have called Question No. 60, Sir, and there was a great delay while the right hon. Gentleman the Minister of Health got to the Box. His delay was greater than mine on another occasion. Should you not now proceed to the next Question, or leave the Minister out altogether?

Mr. Speaker: I do not think that the same considerations govern the situation. When an hon. Member does not take the opportunity to ask his Question, in the interests of others I am compelled to move on. But when a Question is asked and the Minister takes some time in transit to the Box, I should not on that account deny to the hon. Member the Answer to his Question. The two must be different.

The Minister of Health (Mr. Enoch Powell): The Hospital Plan will not increase the nursing staff required.

Mr. Wade: Is not the right hon. Gentleman aware that there are already several hospitals which would be half empty had they not recruited staff, doctors and nurses, from the Commonwealth? Is he quite satisfied that when these new hospitals are completed there will be sufficient doctors, nurses, physiotherapists and others to staff the hospitals so that the public may benefit from these much needed new hospitals?

Mr. Powell: Yes, Sir. I am aware that there in an important Commonwealth contribution to the staffing of our hospitals, but I am confident that the strengthening of the staff of our hospitals will continue as it has in the last few years and that the Hospital Plan itself will be one of the most important recruiting agents for our hospitals.

Mr. J. Wells: Can my right hon. Friend tell the House Where the Liberal Party was on the night we had a debate on nursing staff?

Mr. Speaker: Order. The whole question is out of order.

Mr. K. Robinson: Would not the right hon. Gentleman agree that the staffing of hospitals at the moment could hardly be described as adequate so far as nurses are concerned? Would not he further agree that staffing will fall disastrously if he persists in his present policy of treating nurses as he is doing?

Mr. Powell: No, Sir. The staffing of our hospitals is more nearly adequate than it has been at any time in the past.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Orders of the Day — BUDGET STATEMENT

3.32 p.m.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I begin with the Exchequer out-turn for the past financial year. The Committee can see the figures in the first three tables of the Blue Paper.

Orders of the Day — THE EXCHEQUER

EXCHEQUER OUT-TURN 1961–62

Inland Revenue receipts, at £3,645 million, were £47 million more than the estimate. Customs and Excise duties, including the yield of the surcharge imposed last July, produced £2,595 million. This compares with the Budget estimate of £2,510 million, to which must be added the estimate of £130 million for the surcharge. The actual receipts, therefore, were £45 million less than those combined estimates for Customs and Excise duties.

Motor duties at £141 million fell short of the estimate by £14 million, but other revenue at £264 million produced an extra £19 million. In total, the out-turn of the revenue at £6,645 million was £137 million above the original Budget estimate, or, if the estimated yield of the surcharge is taken into account, £7 million more, which, I think, is a remarkable piece of accurate estimating.

Now we come to the expenditure. Expenditure above the line came out at £6,235 million, or £233 million above the estimate. Within this total, Consolidated Fund services at £867 million showed an increase of £52 million due mainly to the rise in interest rates following the increase in the Bank Rate last July. Supply expenditure at £5,368 million was £181 million above the Budget estimate. Revised and Supplementary Estimates totalling £248 million were partly offset by savings of £67 million.

The result above the line was a surplus of £410 million. This is £96 million less than my original estimate of £506 million, but £263 million more than the out-turn of the previous financial year when the surplus was £147 million.

Below the line, receipts at £517 million were £3 million more than estimated. Total payments at £1,138 million were £49 million more. There were two substantial divergencies from the estimates. Loans to the nationalised industries and the Post Office required £80 million more. Loans for overseas assistance, though up on the previous year, were £29 million less than the estimate. The net deficit below the line was £621 million.

Thus, the overall deficit, or I think that the better description is the net borrowing requirement on Budget account, was £211 million, that is, £142 million more than estimated. This figure of £211 million compares with £394 million in 1960–61. In that year, we were able to meet virtually all our borrowing needs outside the market—this is 1960–61—and since, in the year, we made net sales of nearly £300 million gilt-edged securities, we were able to use practically all the proceeds to pay off market Treasury bills. In 1961–62, with our smaller overall deficit, we have been able to do rather better; our borrowing outside the market, for example, National Savings, exceeded our needs by just over £250 million, so that we were able to reduce correspondingly our total indebtedness to the market.

Since the proceeds of our sales of gilt-edged securities have been just about enough to meet our liabilities on the two maturities which occurred during the year, the bulk of this reduction has taken the form of paying off market Treasury bills. My expectation, that I should not be looking to the gilt-edged market for new money in 1961–62, has been fulfilled; and for the second year running we have been able to reduce our reliance on market Treasury bills.

A notable contribution to last year's result was once again made by National Savings. Given the circumstances, particularly the rise in other interest rates, it would not have been reasonable to expect National Savings to do as well in the past year as in the previous three years. But, despite these difficulties, the amount remaining invested in all forms

of National Savings increased by £170 million. Of this, £78 million represents net new receipts to the Exchequer. Once again, and I am sure that the Committee will be with me on this point, I wish to thank Lord Mackintosh and all the other workers in the National Savings Movement for their highly important work.

Orders of the Day — REVIEW OF THE ECONOMY 1961–62

The Exchequer out-turn has to be considered against the background of developments in the economy generally. At the time of last year's Budget, demand for goods and services, for consumption and investment at home, was beginning to place too heavy a load on our productive resources. Incomes were moving up fast and, in consequence, unit costs were rising. After two and a half years of comparative price stability in 1958, 1959 and the first half of 1960, prices were showing a dangerous upward trend.

In these conditions it was clear that a fairly strict Budget was necessary, with a large surplus above the line. I also thought it prudent to ask Parliament for special powers to regulate the economy, either by stimulation or restriction, in the course of the financial year.

In the event, despite the help we received under the arrangements made at Basle, the drain on our reserves, originally set off by the revaluation in March of the mark and the guilder, continued through the early summer and increased in momentum in July. Doubts persisted about the balance of payments, the strength of sterling and the national will to deal with inflationary pressures in the economy.

We therefore took the measures announced to the House on 25th July, including notice of the application for a drawing from the International Monetary Fund, which was subsequently agreed at £536 million.

These measures, in my view, achieved the immediate objective. Confidence in the £ was restored, the drain on the reserves ceased, and exchange rates moved in favour of sterling. Over the following months personal consumption was affected by a number of factors; by a marked fall in bank advances, by the surcharge on Customs and Excise duties,


and by the check to increases in personal incomes. There was also a fall in the rate of stockbuilding. As a result, the pressure of home demand has been markedly reduced. In the light of all these developments it has proved possible to make successive reductions in Bank Rate and to repay £225 million to the International Monetary Fund.

BALANCE OF PAYMENTS

In the balance of payments there has been a considerable change for the better. I am referring to the balance of payments as a whole; the results of our trading transactions, Government overseas expenditure, invisibles and movements on capital account. Full details appear in the relevant White Paper. Exports were £156 million higher in 1961 than in 1960. Imports were £100 million less than in 1960, mainly because of the lower level of investment in stocks. Foreign investment in United Kingdom securities developed on a considerable scale after July, and there has been a small net inflow of long-term capital in 1961, in contrast with the large net outflow in I960 and previous years.

As the White Paper makes clear, the overall figures show a considerable change in 1961 compared with 1960 and earlier. There was an improvement of about £400 million, taking the current balance and the long-term capital balance together, and, although in 1961 as a whole there was still a small deficit, the second half of the year showed a small credit.

It is true that our interest rates have been high, but it is quite wrong to think that the improvement in our balance of payments was due mainly to hot money. On the other side, it should be remembered that there were certain special capital receipts during the year, such as the Ford transaction and the repayment of debt by Germany and France.

I would sum up the experience of the last financial year as follows. The £ was in danger last summer. That danger has been averted. But we still have a considerable way to go to achieve a satisfactory surplus on our balance of payments, having regard to our heavy and continuing obligations for defence,

aid and investment overseas. Nevertheless, the underlying position is now sounder; the movement of our costs is under better control, and the pressure of home demand is not excessive. We should now be able to take full advantage of the export opportunities ahead.

Orders of the Day — ECONOMIC PROSPECTS FOR 1962–63

Conditions for trade in the world as a whole look favourable. In North America a strong recovery has been in progress for some time, and although it has slowed down in recent months there is reason to expect that it will continue. In Western Europe there has also been some slowing down in the last twelve months, but the expectation is that there will be a definite expansion in the months to come. The primary producing countries, which have not been well placed in the last year or so, may hope to do rather better this year. Taking the picture as a whole, we can reasonably expect a substantial growth of demand in the world for the types of goods which we export. Our sales abroad should increase considerably if we keep our prices right and if we have the resources to make, and the will to sell, the goods wanted. The prospects for invisible exports are slightly better. This is a welcome change.

But in order to ensure that we do not fail over exports, we have to examine the other calls on our resources. First, fixed investment. Here, the trends are not uniform. The large public sector investment programmes, an account of which was presented in the White Paper of last October, are planned to rise by 5 per cent. in real terms between the financial years 1961–62 and 1962–63. In the private sector, industries concerned with distribution and services, according to Board of Trade forecasts, show a rise of 8 per cent. in real terms between 1961 and 1962.

Private investment in housing is also expected to rise a little. Only in investment by manufacturing industry is some reduction expected. The figures for the last quarter of 1961 show that this is already in progress, and a further gradual reduction seems probable. But it should also be remembered that the level of


manufacturing investment has been high over the past two years.

At its peak last autumn it was one third higher, in real terms, than eighteen months earlier. Even in twelve months' time this kind of investment should remain above the level reached in 1960, which was itself higher than in any previous year. Putting all these figures together, we expect total investment in real terms to rise slightly in the course of 1962.

I am now dealing with various claims on demand. Expenditure on goods and services for current purposes by the Government and other public authorities will rise by about 3 per cent. this year. We must take account of the probability that later in the year there will be renewed investment in stocks. The expansion in economic activity, for all these reasons, will add to consumers' incomes. This should lead to a substantial rise in personal spending in the course of the year. There is also good reason to expect increased buying of consumer durables on hire purchase. By this time next year total personal spending may well be up by 4 per cent. in real terms—a very large rise in relation to the average experience of recent years.

In total, therefore, the increase in home demand over the next twelve months looks like being substantial. Since it is so necessary to keep the way clear for the growth of exports, this must be carefully watched. By the end of 1962—and it is no good our trying to avoid facing this possibility—the cumulative effect of all the factors I have mentioned could result in too great a call on our resources if we do not keep the balance right.

INCOMES POLICY

Keeping the way clear for the growth of exports also means continuing and developing the incomes policy. The recent O.E.C.D. report on the United Kingdom contains this passage:
The problem for the Government and for both sides of industry is to evolve a more permanent system for the determination of money incomes which is accepted as just and reasonable by the community as a whole and which, in conditions of full employment and steady growth, can assure the maintenance of a satisfactory competitive situation in international trade. Such a system will entail that the Government adopts a more positive attitude than in the past to the process of income determination.

Those are admirable words. I have been trying to take a positive action, but I do not think that it was quite so easy as it sounds, nor was it universally approved.

I should have hoped that we could all agree on the basic proposition that increases in incomes must be related to increases in production. If I may, I will quote from the T.U.C.'s reply of 24th January to my letter about incomes policy: It said:
It is, of course, a condition of reasonable price stability that increases in incomes should keep in step with the growth of real output.

The T.U.C. did not, however, feel able to co-operate at that stage in an attempt to work out how that should be done. I know that this is a controversial and difficult subject. There is plenty of criticism, and not very many constructive suggestions.

But I believe that the incomes policy has proved its worth. Weekly wage rates in the four months from last October to February went up only 0·8 per cent. compared with the rise of 2·7 per cent. in the corresponding period of the previous year. By checking the upward trend it is my conviction that the incomes policy will be found to have improved the position of those who suffer most from inflation.

Mr. Charles Loughlin: Tell that to the nurses.

Mr. Lloyd: Unpopular though our actions have been, we have gone some way to compel the country to face up to this problem—in many ways the central problem of the 1960s.

Mr. Loughlin: After ten years of Toryism.

Mr. Lloyd: And the Committee may be interested to know that some of our competitors are now having to face it, too.
The Government have produced the White Paper on Incomes Policy as guidance for 1962. I would add two points. First, that we cannot afford to have a second general round of increases in the later months of 1962. Secondly, although I hope that we shall be able to deal with some of the anomalies which undoubtedly exist, it would be an illusion to think that in 1963 or thereafter, whatever our rate of growth, we


can afford to return to a system of indiscriminate increases in personal incomes.

EXPORT INCENTIVES

With regard to export incentives, I am sure the Committee will have read with interest the account of the very full survey carried out recently by a group set up by the F.B.I. under the chairmanship of Sir Archibald Forbes. For a number of cogent reasons the report of that group was against the introduction of Government financed export incentives. I agree with its conclusions on this central issue. The group made a number of other useful recommendations which are being studied and, in some cases, already acted upon. Meanwhile, in recent months, as the Committee knows, the facilities for export finance have been markedly improved, in addition to the thorough overhaul of our export credit guarantee system carried out in the last eighteen months.

If we reject a system of direct incentives, what other help can be given? Obviously, the changes in Bank Rate will assist. The high rate introduced in July played an important part in reversing the outflow of funds from this country and in checking the pressures on the economy. Now that sterling is strong, and the economy is no longer under the same pressure, we have been able to return to lower short-term rates. This will be helpful to exports and investment.

I must take into account the effect on the economy of these reductions and of the other factors which I have described and which point to a rising pressure of demand in the course of the year. Against that background the essential requirement, in my judgment, is that we should not, through the Budget, give such a further stimulus to home demand as would endanger the expansion of exports. On the other hand, we all want to see a growth of economic activity on a sound basis; in other words, of such a nature as not to involve us in renewed balance of payments difficulties.

GROWTH

I believe that such growth is within our power to a greater extent than ever before. The whole purpose of my

policies has been to make this possible. The need has been to accept a measure of discipline in order to achieve a major improvement in our position. At the risk of repetition I emphasise again that an expansion at home, generated by the ability to sell an increasing volume of exports and services, will not need to be held down in the interests of the balance of payments. A sound international competitive position is the essence of the problem. This is so whether or not we enter the Common Market.

Orders of the Day — NATIONAL ECONOMIC DEVELOPMENT COUNCIL

In this context, the setting up of the National Economic Development Council is a step of major importance. At the first meeting of the Council I defined its tasks in the following terms: First, to examine the economic performance of the nation with particular concern for plans for the future in both the private and the public sectors of industry. Secondly, to consider together what are the obstacles to quicker growth, what can be done to improve efficiency, and whether the best use is being made of our resources. Thirdly, to seek agreement upon ways of improving economic performance, competitive power and efficiency, in other words to increase the rate of sound growth.

The whole emphasis is on the importance of achieving a faster but soundly based rate of economic expansion. At next month's meeting of the Council I hope that we shall agree on the method of carrying out an urgent study of this problem. I believe that such a survey must be related to a specific figure for annual growth in the gross national product. The collective target agreed in Paris by the O.E.C.D. for this decade is one of just over 4 per cent. a year. It will be for the Council to decide whether its study should be based on that figure, or a larger one, and what period of years should be taken for this.

For the first time since the war we shall have a body with its own staff which will include Ministers, representatives of the T.U.C., some outstanding men chosen from the management side of industry, public and private, and two distinguished independent members,


meeting together to consider the problem of how to achieve a faster and continuing rate of economic growth.

I certainly do not expect hon. Members on the other side of the Committee to approve the quality of the ministerial membership—that would be too much to ask. But I think that there will be agreement about the high quality of all the others who have agreed to serve on this Council at my invitation. The Council will be considering matters under the direct control of Government such as levels of tariffs, methods and incidence of taxation, and public investment; and matters which will more directly concern both sides of industry, for example, the recruitment and training of labour, restrictive practices, efficiency in management, the better use of skilled manpower.

Certainly, I have no intention of seeking to set limits to the Council's examination of these matters which are very much for industry as well as for the Government—both sides of industry—nor of other matters, such as the best development of our scientific and technical resources. What the Council must do is to set an ambitious but realistic target figure. Both sides of industry, the Government, and, indeed, all sections of the community, must be prepared to face up to the practical consequences involved in its achievement. I say again that I believe that this new development is one of the highest importance for the country as a whole.

Orders of the Day — EXCHEQUER PROSPECTS FOR 1962–63

I now turn to the Exchequer prospects for 1962–63.

Here, the figures are complicated by the surcharge and I want to be very careful not to cause any misunderstanding. The figures which I shall give are on the assumption that taxation continues for the full year at its present rates; in other words, for the full year at the rates laid down in my last Budget plus the 10 per cent. regulator. This is not the statutory position because, as the Committee knows, the surcharge is due to expire at the end of August. I am simply giving the Committee the effect, over the financial year as a whole, of rates of taxation as they now are; in

other words, with the 10 per cent. surcharge in force.

On this basis, total revenue in 1962–63 would be £6,807 million, or £162 million more than the actual receipts last year. To break down that figure, I expect Inland Revenue duties to produce £3,720 million, £75 million more than last year's outturn. Customs and Excise receipts, on the basis I have explained, would be £2,731 million, which is £136 million more than last year. Motor duties are put at £150 million, an increase of £9 million on last year's receipts. Other revenue at £206 million shows a decrease of £58 million on last year's receipts which included the special debt repayment of £60 million from Germany.

On the expenditure side, Consolidated Fund services are expected to require £753 million, a decrease of £62 million on last year's estimate. The net provision for interest on the National Debt after taking into account additional interest receipts on Exchequer lending below the line shows a fall of £60 million.

Supply expenditure for this year will be £5,611 million. I dealt with this in my statement on the Vote on Account on 27th February. The Committee will remember the three main points. First, on a comparable basis the 1962–63 Estimates as published exceed last year's Budget estimates by £384 million. Secondly, I emphasised that seven-eighths of this increase is accounted for by six large items—defence, agricultural support, the B.T.C. deficit, the National Health Service, roads and general and rate deficiency grants to local authorities, predominantly for education. Thirdly, I said that there had been some drastic pruning, especially of administrative costs: more than one-quarter of the civil Votes have been reduced below last year's level, and these include the administrative Votes of six large Departments of State.

Nevertheless, I say frankly to the Committee I see no diminution in the public pressures to put additional burdens upon the Exchequer. But if we do not keep down these demands to what can be safely met out of increases in the gross national product, we have no hope of preventing an intolerable burden of taxation with all its consequences for our costs and balance of payments.

Total expenditure above the line in the coming year is £6,364 million. The total revenue on the basis I have indicated I put at £6,807 million. The surplus above the line would then be £443 million. This compares with my Budget estimate last year of £506 million. It is £63 million less, but last year's figure included, as I said earlier, £60 million of special capital receipts.

Net payments below the line are estimated at £507 million, a decrease of £114 million on last year's outturn. Details of these items have been published in the recent White Paper, and I will not go into that this afternoon.

So, with a surplus above the line of £443 million and net payments below the line of £507 million, the overall deficit, or net borrowing requirement of the Budget for the coming year, would be £64 million, compared with the estimated figure of £69 million last year and with the actual deficit of £211 million. These figures, as I have said, and I want there to be no misunderstanding about this, are based upon estimates of what the revenue would be, if the rates as increased by the Customs and Excise surcharge were to continue throughout the whole of this financial year. What, therefore, I do about the surcharge is very important.

Orders of the Day — SIMPLIFICATION OF THE TAX SYSTEM

I wish, however, first to refer to certain matters which I mentioned in my Budget speech last year affecting reform of the tax system. I referred then to the possibility of a single corporation tax replacing Income Tax and Profits Tax. I said that I was not worried by one problem mentioned by the Royal Commission, that the rate of such a corporation tax might fall below the standard rate of Income Tax. There were, however, other difficulties referred to by the Royal Commission for which the Inland Revenue have been seeking possible solutions.

Upon my instructions, they have gone a considerable way towards framing a scheme for unification. I felt that that was necessary, so that we could compare existing arrangements with the proposed scheme from the point of view of complexity

and the burden of work on taxpayers and their accountants. For my own part, I still believe that, in principle, it is a good idea to unify. But some complex technical problems are involved. Upon their solution depends the decision whether or not it is worth while to unify. Of one thing I can assure the Committee, as I think I said last year. I have no intention of introducing a scheme which is more complicated than the one it replaces.

I have, therefore, asked the Board of Inland Revenue to discuss the draft scheme on the usual controversial basis—[Laughter.]—on the usual confidential basis. I think that in view of the discussions among accountants it could very easily be controversial. I have, therefore, asked the Board of Inland Revenue to discuss the draft scheme with some of the professional bodies with which they are accustomed to review technical issues of this kind. I hope that those who are approached will be good enough to help. We have got beyond the stage of general talk about the desirability or otherwise of a single tax and can now look at a possible scheme. I will report further on this to the Committee in due course.

Orders of the Day — FORM OF ACCOUNTS

Another matter I mentioned last year was the form and presentation of the Government accounts. I said that they were confusing and in need of modernisation. A great deal of work has been done on this. The first fruits have already been made available to hon. Members in the shape of the Civil Estimates, in their new and simpler form, in one volume. No doubt, Professor Parkinson will be the first to acknowledge the feat in compressing into 540 pages what used to fill over 1,200 pages. The material placed before Parliament in this volume is much smaller in sheer bulk than hitherto. But it will be found that nothing important has been dropped.

I hope that it will be agreed that in their new form both the Estimates and the Financial Secretary's accompanying Memorandum are more intelligible than before. This is no reflection on my hon. Friend the Financial Secretary. We hope next year to produce the defence


Estimates in a similar form and the detail is now being discussed with the Estimates Committee.

This is part of the process of increasing and improving the financial and statistical information made available to Parliament and the public. As another step in the same direction the first issue will appear next month of a new monthly publication. This will bring together financial statistics now published in a number of different ways and include certain new information. This follows the recommendation of the Radcliffe Committee—the appropriate Radcliffe Committee—that financial stastistics should be improved. I also commend to the Committee the new bulletin on Incomes, Prices and Production, issued by the Ministry of Labour.

With regard to the Exchequer Accounts themselves, I hope to publish later in the year proposals of how they might be radically improved. It is not exactly an easy problem. There are certain statutory difficulties, but I believe that we are making progress here, too.

Orders of the Day — MISCELLANEOUS INLAND REVENUE MATTERS

I now come to certain changes in direct taxation which I have to propose, most of them of a relatively minor nature.

ARMY BOUNTIES

As promised, I propose to include in the Finance Bill a Clause about Army bounties. Under the scheme announced last July, a special £200 bounty is payable to men in the Regular Army who extend their service and to National Service men who enlist on a Regular engagement. I am asking the Committee to exempt this from Income Tax.

PERSONAL TAXATION

There are two minor reliefs in personal taxation which I propose to make in order to help those whose cases seem to me especially deserving. First, what is called small income relief. I propose to raise the income limit for this relief on the investment income of people under 65. This limit has not been raised since 1955, though the income limit for the age relief, which gives corresponding relief on investment income for people

over 65, has since then gone up, by two stages, from £600 to £800.

I propose to put up the limit for people under 65 from £300 to £400. This will mean that, for example, a single woman under 65 with an income of £400, drawn solely from investments, will be £22 better off this year. There will be an appropriate adjustment to the marginal relief provisions. This change will cost about £l½ million in a full year and £½ million this year.

The second proposal concerns the Income Tax age exemption. This gives a special exemption in favour of people of 65 or over living on small incomes not much above the amounts which are freed from tax by personal allowances and reliefs. At present, an elderly single person pays no tax if his income does not exceed £275; and a married couple, where either husband or wife is 65 or over, are exempt if their joint income does not exceed £440. I propose to raise the exemption limit for the elderly single person to £300 and the limit for the elderly married couple to £480. This means that such a couple with £480 a year will not in future pay tax. This makes a difference of £18 this year. This change will cost £2½ million in a full year and £1½ million this year.

ESTATE DUTY

I have four changes to propose in Estate Duty. In the first place, I propose to raise the Estate Duty exemption limit from the present figure of £3,000 to £4,000 with an appropriate adjustment in the rates of duty up to £6,000. The figure of £3,000 was fixed in 1954 and I think that the time has come to give this further relief to small estates. The raising of the starting point to £4,000 will exempt from duty about 18,000 estates each year. The new scale up to £6,000 will afford some relief to another 20,000 small estates. This change will take effect in the case of deaths occurring after today. The cost will be £1¾ million in a full year and about £1 million this year.

Secondly, I propose to introduce legislation to deal with a method of avoidance which has received a good deal of publicity in the Press recently. Our Estate Duty charge, in the case of a person domiciled in this country, does not extend to land or other immovable


property abroad, although it does extend to movable property abroad. It is, therefore, possible for a person domiciled here to avoid duty by buying land overseas or by investing in mortgages in countries where mortgages are regarded as immovable property.

This gap in the Estate Duty charge is now being exploited on quite a large scale. I propose, therefore, to bring immovable property abroad within the scope of our Estate Duty. This change will take effect as regards deaths occurring after the Finance Bill becomes law. The yield is estimated at £1 million this year and £2 million in a full year.

I want, however, to avoid any possible hardship arising from a double charge of death duties on the same property. Accordingly, I propose that death duties payable in the country where the property is situated shall be credited against the Estate Duty payable in this country. The law already provides for this to be done in many cases under arrangements applying both to Commonwealth countries and to foreign countries with which we have double taxation agreements. There are, however, other cases and I propose that this relief shall now be given in all cases where we charge duty on property abroad which is also charged with duty in the country where it is situated. This new and important relief will apply to property of all kinds, both immovable and movable property. The cost will be ££½ million this year and £1 million in a full year.

The Bill will also include a provision enabling us to enter into comprehensive agreements for the avoidance of double death duties with countries with which, for rather technical reasons, we cannot make such agreements at present. One of the countries is France, with whom we have recently agreed the terms of a draft convention, and this legislation will enable us to ratify that convention.

ANTI-AVOIDANCE LEGISLATION

Certain doubts have been raised about the application of the 1960 legislation on one or two points dealing with dividend stripping and related activities. I think it necessary to resolve these doubts, since otherwise there could be a serious loss of revenue. What I propose will fulfil

the intentions of the 1960 legislation. My proposals will not be retrospective.

I propose also to deal with a device which is being used to avoid tax on building operations. Two connected persons divide between them what is in reality a single operation. One of them acquires the freehold of a building site and contracts to grant a lease to the purchaser of a building to be erected on it. The other puts up the building. Any building profit is subject to tax; but any premium paid for the lease, and any receipt on a subsequent sale of the reversion, go free of tax in the hands of the one who bought the land. In this way what are in reality some or all of the profits of the enterprise are converted into non-taxable form. The Bill will impose an appropriate charge on the person owning the land where this or similar devices are employed.

STAMP DUTIES

I am also proposing a minor amendment in the Stamp Duty law, namely, the abolition of settlement duty, except in the case of unit trusts. The law governing this duty is complicated and difficult to apply. The yield, apart from the unit trusts, is only about £30,000 a year. It is reasonable to retain the duty for the unit trusts, because it corresponds broadly to the Stamp Duty on a company's capital including that of an investment trust company. But I shall also remove a minor blemish affecting unit trusts. Under the existing law, a unit trust which contracts in size and then expands again has, in effect, to pay duty twice on the same amount of capital. This will no longer be the case. These changes will take effect from 1st August.

TITHE ANNUITIES

I shall do something to speed up the redemption of the annuities payable under the Tithe Act of 1936. The outstanding annuities yield about £2¼ million a year, paid by about 110,000 landowners. It is not surprising, therefore, that the costs of collection are high in relation to the yield. I therefore propose, following what was done in the case of Land Tax in 1949, to introduce legislation making the annuities compulsorily redeemable when the land in respect of which they are payable is sold after 1st October this year. I hope that


in cases where land is not being sold the owners will consider whether they cannot undertake redemption voluntarily. The terms are not ungenerous—about fourteen years' purchase.

DOUBLE TAXATION ARRANGEMENTS

There is a small, highly technical point arising out of Section 17 of last year's Finance Act on which I propose to make a concession. This Section dealt with double taxation agreements with overseas countries. It enabled credit to be given against United Kingdom tax for overseas tax which has been relieved by the overseas country in the interests of development. Under our general tax law, however, a dividend paid by a United Kingdom company out of income which has enjoyed a tax credit under this provision would have to be grossed up by reference to tax that had never been paid. This would clearly lead to a wrong result. I propose to remedy the position in the Finance Bill.

LOSS RELIEF

I also propose a simplification of the rules relating to the calculation of relief when trade losses which are augmented or created by the deduction of capital allowances are set against the trader's general income. The change will be of particular benefit to shipping at this time, though it will also be of general application.

The new rule that I propose will provide, broadly, that in computing a trader's loss for a period, the capital allowances to be taken into account will be those based on the events of the period for which the loss is computed. That does not seem to be an unreasonable proposition. This gives relief earlier than under the present rule. I estimate that the cost will be about £6 million this year and £4 million next year, of which more than half will go to benefit the shipping industry.

SCHEDULE A

There is one other item of direct taxation to which I want to refer, namely, Schedule A. In the Finance Bill debates last year, I said that the proper time for the Committee to decide on the future of Schedule A would be in connection with the 1963 Finance Bill, when the new valuations for rating purposes in

England and Wales would take effect. That stands. It is, however, obvious that we could not charge owner-occupiers of residential property with Schedule A Income Tax on the new rating valuations. We should then be suddenly trebling or quadrupling the burden of the tax on many of those who pay it. That would be intolerable.

Indeed, the new situation, which the revised rating valuations will bring about, indicates the unsatisfactory character of this tax in its application to the owner-occupier of residential property. Unless it is charged on current values it is difficult to find a firm basis for the tax which is, in any event, a tax on what has been described as notional income. Many people have to make their plans ahead: there are decisions to be made whether or not to appeal against new assessments.

Therefore, although I intend that this matter shall be dealt with in the 1963 Finance Bill, as I have said before, it is right to say this now. We will not seek to use the new rating valuations for Schedule A purposes so far as these owner-occupiers of residential property are concerned. On the contrary, for the reasons which I have set out, we will make proposals for bringing this tax on them to an end.

I cannot say now whether this will be done in a single operation in one year. It will mean giving up about £50 million a year. Whether we can manage to get to that position in one year will depend on revenue considerations. But Schedule A for owner-occupiers of residential property will go.

The moment has now come, I think, to recruit my energies in the usual manner, by drinking from this glass. Last year I was able to tell your predecessor, Sir William, how much a gallon of this particular commodity would cost him in duty. Alas, the moment has not yet come in my speech this year for me to be able to be so' precise; but, Sir William, do not be too hopeful. Also, because of the next passage in my speech, a little short-term stimulation may be advisable.

Orders of the Day — SPECULATIVE GAINS

I now turn to a subject on which there has already been a considerable amount of public discussion. I have stated on several occasions my objections to a


capital gains tax. The most important one is that such a tax would militate against saving, genuine investment and economic growth. I have not, therefore, come here today to propose a capital gains tax, but to suggest that what may loosely be called speculative gains should be subject to tax.

While the main function of any system of taxation must be to bring in revenue, it must also be designed to produce a feeling of broad equity of treatment between taxpayers. At present, it is pretty widely felt to be inequitable that those who supplement their incomes by speculative gains should escape tax on those gains. I do not think that they should continue to do so; and I tell the Committee frankly that it is on this account, and not mainly for yield, that I put forward this proposal.

Certain types of quick gains secured by those not engaging in such operations as a business, are under the present law treated as capital receipts. Although ordinary people find it difficult to distinguish them from income, and they may often be used as income, they are not taxed. Those engaged in certain types of profit-seeking transactions now escape tax altogether—for example, the man who buys stocks and shares not to invest but in the hope of a quick profit, and the man who buys land in the hope of a quick speculative profit through a sale to a genuine developer.

Those who make a business of such transactions are taxed already as traders. Those to whom the new arrangements will apply are those of whom it cannot be established that they are carrying on a business. In my view, however, it is wrong that such people should escape taxation on such activities.

The problem is not a new one. The 1920 Royal Commission advocated action: the Radcliffe Commission said that it needed consideration. I have said repeatedly that I intended to tackle it. I propose to bring such profits within the existing charge under Schedule D of Income Tax by way of a new Case VII.

I have examined various ways of doing this and have come to the conclusion that the appropriate method is by a time test. What I propose is that if assets are acquired and disposed of within a stated period of time—and the

period will differ for different kinds of asset—any gain will be taxable under the new Case VII. The periods fixed will be such that the reasonable inference can be drawn that in general the transactions were of an income-seeking nature. What I am asking the Committee to do is to bring within Schedule D transactions which, some say—wrongly, I am advised—are already within the law.

I wish at this stage to make one other point. There have been all sorts of conjectures—speculation of another sort—about my intentions. The proposals which I shall put before the Committee have been drafted on the basis of instructions given last autumn, but their embodiment in legislation has involved consideration of many important points of detail and has required very careful drafting. There has been no change on any point of principle since my original instructions.

GENERAL CHARGE ON CERTAIN SHORT-TERM GAINS

I propose that, with certain exceptions to which I shall refer in a moment, gains not now chargeable which result from the acquisition and disposal of stocks, shares, securities, land, including of course buildings, commodities and other property, or interests or rights in such assets, shall be made subject to tax if the disposal happens within a specified period from the date of acquisition.

I propose to exclude from this general charge certain types of property. First, I exclude movable property like pictures, personal belongings and motor cars, because I do not think that to bring these in would be worth the complications involved. A gain on the sale of the house owned and occupied by the seller will not be chargeable. If someone is fortunate enough to have more than one house, or more than one residence, it will be the proceeds of sale of the main residence which will escape charge. The charge will not apply to the sale of the fixed assets of a business, such as factory buildings and plant and machinery, if they are sold by a person who has actually been using them in a business carried on by him.

For interests in land the charge will apply if the period from acquisition to disposal is three years or less. For all


other chargeable property including stocks, shares and securities, the charge will apply if the period from acquisition to disposal is six months or less.

Mr. John Rankin: Why the difference?

Mr. Lloyd: This difference in period conforms to the reality of the situation. "Short term" in relation to land is something quite different from "short term" in relation to stocks and shares. The charge will not apply if either the acquisition, or—in the case of "bear" transactions—the disposal, occurred before tonight. There will be no retrospection.
Broadly speaking, the gain to be charged will be calculated by deducting from the realised price the cost of acquisition, but allowance will be made for proper and relevant expenditure incurred by the seller.
The gains will be taxed as income in the ordinary way. If they arise to an individual they will be charged to Income Tax, and, where the individual's income is big enough, to Surtax also. I propose, in the case of a company, that they will be charged to Income Tax and Profits Tax. I propose that losses arising out of transactions which, if they had been profitable, would have given rise to a charge to tax, shall be allowed to be set off against chargeable short-term gains of the same tax year, or, if necessary, of subsequent years by carry forword. But losses of this kind will not be allowed to be set off against ordinary income.
The general charge will apply to gains from property at home or overseas, but persons not resident in the United Kingdom for Income Tax purposes will not be liable. There will be special rules to deal with gifts. If the giver and recipient fulfil certain conditions, there will be no liability to tax unless there is a disposal by the recipient within the governing period from the date of acquisition by the giver. With regard to property passing on death, I propose that no new charge shall arise. Sales by the personal representatives, or the beneficiaries, of property passing to them on a death will be disregarded for purposes of the new Case VII.
I propose also that charities, approved superannuation funds and approved

scientific research associations, which already enjoy exemption from Income Tax in respect of their investment income, shall be given corresponding exemption from any tax that might become chargeable on them under Case VII.
Provisions will be needed to deal with a number of special situations. I must ask the Commettee to await the Finance Bill for the fill details, but I think it right to refer to one or two specific matters. First, bonus issues, that is, where new shares are issued without cost to holders of existing shares in a company. The bonus issue of itself will not attract tax. If the shares constituting the bonus issue are subsequently sold, they will be regarded as having been acquired by the seller when the parent shares, in respect of which they are issued, were acquired.
Secondly, rights issues, that is, where existing holders of shares in a company are given the right to buy new shares or securities in virtue of their existing holding at a price which may well be below market value. I propose to treat existing shareholders as having acquired their rights at the date when they acquired the parent shares in virtue of Which the rights are issued. If bonus issues, or rights issues, or the shares in virtue of which they were issued are sold within six months from the date of acquisition of the original shares, a charge to tax will arise and special rules of computation will be provided. If, of course, a person buys rights in the open market, and sells them or the shares when taken up within six months, that will be a transaction of acquisition and disposal involving liability.
Thirdly, options. These involve a potential buyer and a potential seller. As regards a buyer of shares who acquires them through the exercise of a previous option, we shall treat him as acquiring the shares when he exercises the option. We shall treat the seller as having sold his shares on the date when he entered into a contract giving an option to somebody else to buy them.
I give these details of particular kinds of transaction by way of illustration, but I repeat the general principle so that all may be aware of it—that from


tomorrow transactions of the kind that I have described may involve a liability to tax.
I should add a word on the obtaining of information about gains liable to tax under Case VII. We shall rely primarily upon the ordinary Income Tax returns which will include a section for reporting chargeable gains under Case VII, but further powers will be needed to safeguard the Revenue against evasion. We shall not seek a power to obtain general returns of all transactions carried out by agents on behalf of clients. That would create an unmanageable mass of paper. But we shall propose that powers be given to the Inland Revenue to obtain from brokers, estate agents, banks and other persons who act for clients in chargeable transactions details of transactions carried out on behalf of named persons.

SALES OF SHARES IN LAND-HOLDING COMPANIES

In connection with the new Case VII it is necessary to provide for the case where an operator uses a company to buy land and then disposes of the acquisition by selling the shares of the company rather than the land itself. In broad outline, my proposal is that if shares in a closely controlled landowning company are sold by a shareholder owning a substantial interest in the company, any gains outside the six months' period will, nevertheless, be brought into the new charge. But the amount of the charge in these cases will be limited by reference to any appreciation in the value of land which was acquired after today and which, at the time of the sale of the shares, had been held by the company for not more than three years.

YIELD

In 1962–63, there will be no yield of tax under Case VII, since information about the short-term gains and losses of that year cannot be available for the purpose of making assessments until the summer of 1963. As far as the yield thereafter is concerned, it is quite impractical to estimate it. Inland Revenue have no statistical information on which to base an estimate. I emphasise again that yield is not my main purpose. What I intend to achieve is a greater sense of fair treatment between taxpayers.

DEALINGS IN PROPERTY

I propose to include within Case VI of Schedule D certain transactions in land and property which are cloaked in a form that escapes liability under the present law—for example, the dealer in property who, alone or with associates, escapes tax liability in the following way. He forms a chain of companies with suitably framed articles, through each of which he puts one transaction so as to avoid the implication that he is trading. If, regarding all the activities of these companies as though they were the activities of one person, they amounted to the carrying on of a trade, a gain on a particular sale by one of the companies would be taxable. I propose to make this the law.

Orders of the Day — BUSINESS EXPENSES

One final point on direct taxation. I referred last year to business expenses and the benefits received by directors and senior excutives, and to the general subject of business entertaining. Action was taken last year to tighten up the tax treatment of motor cars used by business and professional people.

The revised and more detailed form for employers to fill up, to which I referred last year, and which is now receiving quite a lot of publicity, has been sent out, and I shall consider the whole matter further in the light of the information that emerges from the returns in this new form. But I think that those hon. Members of the Committee who study the new form will realise that it should enable us to have a much more comprehensive picture of business expenses.

Orders of the Day — INDIRECT TAXATION

The proposals which I have put forward on direct taxation will cost this year £8½ million.

In the light of this, I return to indirect taxation and what should be the size of the surplus. Taking the Inland Revenue changes into account, the prospect is for a surplus of £434 million above the line and a net borrowing requirement of £73 million. Having regard to the circumstances which I have set out, the prospects, the opportunities and the risks, I have come to the conclusion that this


borrowing requirement is about right, and that I should not, at this stage, in the Budget, add to or withdraw purchasing power.

This brings us at once to the question of what I should propose about the two regulatory powers in last year's Finance Act. The Committee will remember that the second power for which I asked last year was to impose a surcharge on the employers' National Insurance contribution. This proposal did not receive what one might describe as widespread and enthusiastic approval. I was interested to notice the horror aroused in many quarters, including the trade unions, by the idea of an increase in employers' costs amounting to 4s. per employee per week. I was also interested to notice how many supporters, in theory, of a payroll tax shied away when confronted, in fact, with something analogous.

I do not propose to ask for a renewal of the power to levy this surcharge. This does not mean that I think that the idea of a payroll tax should be abandoned. There may be a place for such a tax, not as a regulator, but as a permanent part of our fiscal system. I think, however, that the idea is one which can be more appropriately considered in connection with a comprehensive review of business taxation.

The 10 per cent. surcharge or rebate on Customs and Excise duties was more readily accepted. It was used on 25th July. It has worked effectively. There is one course I could take with regard to it. I could leave it in force under the existing powers until 31st August and ask the House to extend it from that date to the end of the financial year. That would achieve my Budget objective. I do not, however, think that this would be the right way to act. It is the essence of the regulator that it should be available for use between Budgets. Now that we have arrived at the Budget, I believe the right course is to bring the current surcharge formally to an end, so that we can consider now the rates of taxation for the year as a whole, and whether or not a new power for this sort of surcharge should be given.

I therefore propose to do three things. First, to impose rates of indirect taxation which will give in this financial year a yield broadly equivalent to that

which would have resulted had the present surcharge remained in force for the whole year; in other words, a yield approximately equal to that which I gave earlier in my speech when I outlined the Exchequer prospects for 1962–63. Secondly, I propose to bring the 1961 surcharge itself to an end from midnight tonight. Thirdly, to ask Parliament for a similar power of surcharge or rebate for possible use during this financial year.

I take, first, the duties on tobacco, alcoholic drinks, and on light hydrocarbon oil and derv. I propose to consolidate these duties broadly at the level at which, inclusive of surcharge, they now stand. This means that in these cases present retail prices should not, in general, be affected.

Certain minor adjustments have to be made at the same time. In the first place, there are the margins between the full and preferential rates of Customs duties, and also between the Customs rates and the Excise rates, where there is a protective element. These margins were inevitably increased by the application of the percentage surcharge to specific duties, and I have to take account of this.

Secondly, I intend to simplify in minor respects the structure of certain duties, especially by abolishing small differential charges that have ceased to have any real significance. The results of these changes can be studied in the Financial Statement.

SMOKING AND HEALTH

With regard to tobacco, I am sure that the Committee will expect me to be cautious about this duty, which yields so large a proportion of the revenue. The Committee is also fully conversant with the current public discussion about smoking and health. It has been suggested, among other things, in the Report of the Royal College of Physicians, that the duty should be recast to discriminate against cigarettes and in favour of pipe tobacco and cigars. It would be possible, though more staff would be needed, to deal specially with cigarettes delivered direct from the factories. The difficulty is that any differential tax could be easily avoided by people making their own cigarettes from tobacco which could not be distinguished


for revenue purposes from some kinds of pipe tobacco. Simple devices exist for this purpose—and some of us may have used them already. In fact, manufacture would be shifted from the factory to the home.

I think, therefore, that it is wiser to consider the general level of the duty. The duty is already extremely high: it accounts, with the surcharge, for about 3s. 4d. on a packet of cigarettes selling for 4s. 6d., which is equivalent to a Purchase Tax of nearly 500 per cent. If I were to make a further, penal, increase in the general rate of duty, smoking, even in moderation, would be taken quite out of reach of many people of limited means, and I am not prepared to do this.

I will content myself with consolidating the basic tobacco duty at a level broadly equivalent to What it is now, including the surcharge. In technical language, this means adding to last year's basic rates the average of the surcharges on the most-favoured-nation rate and on the preferential rate. That is the technical language. In non-technical language, it means that a person buying a packet of cigarettes tomorrow will pay the same price as today. In present circumstances it is difficult to estimate the yield of the Tobacco Duty for the coming year. I am putting it at £885 million, which is £15 million more than last year, when the surcharge was operative for eight months only. But in framing my Budget I have taken into account—and that is an element in my Budget statement to which I have referred—the possibility that the yield may be less than this.

The second range of duties on which I propose to maintain taxation at roughly the present levels is that on alcoholic drinks. To do this, I have to take the Excise and Commonwealth preference rates of a year ago, and make the appropriate addition to arrive at the 10 per cent. increase. For spirits, consolidation means an addition of £1 1s. 1d. a proof gallon above the rates of the last Budget; that is, before the surcharge. For beer, it means an addition of 11s. 2½d. for 36 gallons, with corresponding increases for the stronger beers. I repeat, in both cases there should be no changes in today's prices.

Wine is somewhat more complicated, because the preference margins are relatively

larger and there are certain additions for bottled and sparkling wines which were bound under G.A.T.T. My proposals ensure that in no case will the duty on wine be more than at present. Consolidation means an addition of 1s. a gallon to last year's basic duties for light wine and Is. 6d. a gallon for heavy wine. There is no duty distinction between light and heavy British wine, and consolidation here means a uniform addition of 1s. a gallon.

Next, light hydrocarbon oils. The present surcharge on light hydrocarbon oils and derv is 3d. a gallon. Consolidation here means an addition to the basic rates of precisely that amount. We are bound by our E.F.T.A. agreement not to increase the excise protective margin of Is. 3d. a gallon. To avoid doing so it is necessary to increase the Excise rate to Is. 6d. from today's level of Is. 4½d. The revenue reason for this course is over-riding: if Is.4½d. was maintained as the Excise rate, which would mean 2s. 7½d. for the Customs duty, the Revenue would lose about £20 million a year.

There are two other duties where I propose consolidation at the present level, inclusive of surcharge: the football pool betting duty, where the basic rate will become 33 per cent. instead of 30 per cent., and the television advertisement duty, where the basic rate will become 11 per cent. instead of 10 per cent.

I have decided to leave the duty on matches, the countervailing duty on mechanical lighters and the duty on betting at dog-race courses at the levels of the last Budget.

I have also decided not to increase the basic duty on heavy hydrocarbon oils of 2d. a gallon introduced in last year's Budget. That means a cut of 9 per cent. in the present duty inclusive of surcharge. At the same time, I propose to improve in a minor way the existing definition of fuel oils. There will be included among the fuel oils chargeable at 2d. a gallon certain oils, which for technical reasons, have hitherto been liable at 3d.

There is another matter of which I have to take account, and about which I must tell the Committee. In the Stockholm Treaty we undertook obligations


to other members of the European Free Trade Association to eliminate protective margins against them by 1965. I propose to make a start on this process now, by introducing certain new rates at a cost of about £150,000 this year. For manufactured tobacco, spirits and beer, matches and mechanical lighters imported from E.F.T.A. countries I propose that the Customs duty shall be reduced below the most-favoured-nation rate—I cannot avoid using the phrase "most-favoured-nation rate" although, in this context, it seems the least favoured nation rate—by an amount equal to about one-half of the preference margin: or, where there is no preference margin, by an amount equal to half the difference between the Customs duty and the Excise duty. Hon. Members will see an extra column in the Schedules of duty rates giving the appropriate rates for imports from E.F.T.A. countries for the goods I have mentioned.

Looking at these Customs and Excise revenue duties as a whole, the yield from the surcharge for the whole of the rest of the year would have been £139 million. My changes bring in a little less than this—£132 million this year and £138 million in a full year. All these changes take effect from midnight tonight.

PURCHASE TAX

I now come to Purchase Tax. The yield in 1961–62, including surcharge, was £521 million. It is easy to be critical of existing methods of levying indirect taxation. I am not, however, going to deal today with the wide issue whether at some future date it will be desirable to change the whole basis, for example, by the substitution of a turnover tax. I understand that that method is becoming less popular where it operates, and there is a view that a tax such as ours at the wholesale point is to be preferred. However that may be, I consider that there are some changes in our own arrangements which can with advantage be made; indeed, that it is necessary to make.

It is sometimes said that Purchase Tax leads to distortion of the pattern of consumer spending and hence investment, because it is levied on an arbitrary and limited range of commodities. I think that there is great force in this argument.

There is a strong case for broadening the scope of the tax by including some articles which most people would consider just as suitable for taxation as those which are already included.

I propose, therefore, to bring into the tax, at a new rate of 15 per cent. of the wholesale value, confectionery (in other words, sweets, including chocolate biscuits), soft drinks and ice-cream. These changes will operate from 1st May next, in order to allow time for the application of the tax machinery over this new field and for the essential discussion of certain technical questions between Customs and Excise and the trade. Of course, there will be the usual exemption for the small manufacturer, who makes and then sells taxable goods to a value of not more than £500 a year. He will not have to pay tax on his sales, but, of course, he would pay the tax paid price in so far as he buys taxable ingredients.

Lest it be thought that by putting a tax of 15 per cent. on soft drinks, I am prejudicing their position vis-a-vis alcoholic beverages, I would add this. The tax on gin is equivalent to a 400 per cent. rate of Purchase Tax, and that on beer to a 130 per cent. rate. So the 15 per cent. I am putting on tonic water should be compared with the 400 per cent. on gin. Strengthened cider already pays British wine duty equivalent to a Purchase Tax of about 50 per cent. Ordinary cider will now pay the new rate of 15 per cent.

The new tax on confectionery, icecream and soft drinks is expected to yield £30 million this year and £50 million in a full year.

Hon. Members: Oh.

The Chairman: I hope that hon. Members will allow the Chancellor to continue.

Mr. Lloyd: The tax on sweets, though it will be welcomed by the medical professions, or ought to be, will not be popular with the younger generation. As the father of a small daughter I expect some trouble on the home front myself, but I shall brace myself to meet it.
In parenthesis, on what may seem a different topic, but one which also affects the welfare of the young, I stated


in the House on 26th July last that I must for financial reasons put a ban on any action following upon the Wolfenden Report on Sport and the Community. Whatever the effect upon young people of sweets and soft drinks, there can be no doubt about that of games, physical exercise and club facilities. I therefore intend to lift that ban, so that we can start in a modest way to make good some of the deficiencies pointed out by the Report.
A second criticism of present Purchase Tax arrangements concerns the spread of the rates of the tax. Opinions have very much changed as to what items should rank as part of the normal standard of living of ordinary people. The present Purchase Taxes, by their disparity, imply a sort of moral judgment on what people should or should not buy. In our society, I do not think that most people regard motor cars, T.V. sets and cosmetics as very different from jewellery, refrigerators or washing machines. Yet the former are at present taxed at 55 per cent., the latter at 27½ per cent. I do not think that most people would regard carpets, floor coverings, or cooking utensils as very different from clothing and furniture. Yet the first are taxed at 13¾ per cent. and the others at 5½ per cent. I propose to take some action now.
I think that my predecessor once referred to action in this field as "grasping the nettle". It is, in a sense, "grasping the nettle" and, of course, there must be unpleasant circumstances because some particular rates will have to go up, but I believe that we must begin to reform the structure of Purchase Tax, particularly if we are to go into Europe. I therefore intend to reduce the spread, or limits, of the rates. I propose, therefore, that the top rate of 55 per cent. should be reduced to 45 per cent. This includes motor cars, radio and television sots and cosmetics.
The 27½ per cent. rate will be brought down to 25 per cent. This includes, among other things, such household goods as gas and electric fires, refrigerators and washing machines. The 13¾ per cent. and the 5½ per cent. rates will be consolidated at 10 per cent. This means an increase in respect of furniture and clothing—except children's clothing,

which remains tax free—and reductions in a wide variety of household goods, such as carpets, cutlery and hardware.
My changes mean that for a £600 motor car the tax comes down by about £34; for a £65 T.V. set, tax comes down £3 5s.; for £50 spent on carpets, tax comes down £1 3s.; for £100 spent on furniture, tax goes up £2 17s. 6d.; for a £12 suit, tax goes up 7s. 6d.; for a £20 suit tax goes up 12s. 6d.; for £20 spent on cutlery and hardware, tax comes down 8s. 6d.

Mr. Loughlin: It is taxing the newly-weds.

Mr. Lloyd: I believe that, on balance, the newly-weds will be better off. The revenue in this financial year from these changed rates will be £576 million instead of £585 million, which would have been the figure if I had simply retained the 10 per cent. surcharge for the whole year. It will be seen that I am not making these changes for the yield, but to make the tax more sensible and less discriminatory. All these changes in rates will take place as from midnight tonight. I also intend making some very minor changes in the machinery of Purchase Tax.

BREAKFAST TABLE DUTIES

I have, however, one further proposal to make. There are certain revenue duties which are commonly known comprehensively as the breakfast table duties. They have a long history, but have now lost much of their revenue significance, and retain inherited complexities which, I am told, are out of all proportion to the revenue. Some of these are disclosed in the Financial Statement. The revenue element of the duty on tea, as the right hon. Gentleman the Leader of the Opposition will remember, was removed in 1949.

I now propose to do the same for sugar, coffee and cocoa. This means that the surviving duties will apply to foreign commodities at reduced levels and will only exist to preserve preferential and protective margins. In general, preferential rates become nil and the Excise duties on sugar, glucose and saccharin are abolished. When so


reduced, the duties are patently protective in character and they will all be transferred, at an appropriate time after the passing of the Finance Act, to the formal status of protective duties under the Import Duties Act. In no way does it disturb the existing arrangements, both national and international, for the marketing of sugar. This change will secure substantial savings in the work of traders, including export traders, no less than in the work of the Customs, and will carry significantly further the process of simplifying the Customs and Excise duties.

These changes, which come into effect from midnight tonight, will reduce my revenue this year by £15½ million compared to the figure it would have been, including the surchage for the whole year. As a result, it will be possible for a reduction of ½d. a lb. to be made in the price of sugar. This will not only be of help to the housewife; it will also go some way to ease the burden on manufacturers of some of the things I am bringing into Purchase Tax for the first time. Apart from sugar, there will be some small benefit for cocoa and coffee

SUMMARY

My proposals for changes in indirect taxation will provide revenue of £175 million in 1962–63. almost exactly offsetting the revenue I would have obtained if I had proposed to keep the Customs and Excise surcharge in force for the rest of this financial year. Altogether, taking into account the cost of my concessions on Inland Revenue duties, I expect in 1962–63 to have a surplus above the line of £433 million and an overall deficit, or borrowing requirement on Budget account, of £74 million. This, as I have said, I judge to be about right from the general economic point of view; it is also well within what I expect to be able to borrow from National Savings and other non-market sources.

CONCLUSION

The objectives of the Budget can be summarised as follows. I have tried to maintain some momentum behind the reform of our tax system and the clarification of our public accounts. I believe that the Purchase Tax proposals

are a step towards a more rational and better balanced system of indirect taxation. The new Case VII Income Tax, without affecting growth, will meet a long-felt and widely-held grievance and sense of unfair treatment as between taxpayers. I have given an indication of our intentions on Schedule A for owner-occupiers of residential properties.

My proposals, by their general balance, are designed to maintain the improvement in our affairs clearly to be seen since July last. The theme of the Budget is the maintenance of a firm base for sound expansion. The decreases in Bank Rate have helped industry over costs. Should Parliament again give the power to use the Customs and Excise regulator, I shall have an additional way in the coming year of stimulating home demand, if that is what is needed. Our costs, compared with those of some of our principal competitors, have been moving in a way favourable to us, and I believe that our exporters realise the chances which are open to them.

I understand the natural desire to throw off the disciplines and restraints of the past year, but that must be a steady process timed to fit in with actual achievement, and not wishful thinking. I have great confidence in our capacity to take advantage of our opportunities. It may sound bold to say this, but I believe that events will prove the soundness of our policy and the wisdom of our actions.

1. SPIRITS (CUSTOMS AND EXCISE)

Motion made,
That as from the tenth day of April, 1962, the duties of customs chargeable on imported spirits other than perfumed spirits and the duty of excise chargeable on British spirits shall be charged at the rates set out in the following Table; and in relation to spirits on which duty is chargeable at those rates, subsection (1) of section four of the Finance Act, 1918, and section one hundred and twelve of the Customs and Excise Act, 1952 (reduction or allowance of duty in respect of spirits used in medical preparations or for scientific purposes) shall apply as follows:

(a) the said subsection (1) shall apply so that the reduced duties are charged at the rate of 15s. 1d. per proof gallon or, in the case of spirits within paragraph 2 (b) of the Table, at the rate of 20s. 4d. per gallon: and


(b) the said section one hundred and twelve shall apply with the omission of the proviso to subsection (1) (which provides for allowing an additional 1d. per proof gallon on brandy and rum).

TABLE OF RATES OF DUTY


Description of spirits
Excise duty
Customs duties


Full rate
Common-wealth rate
Convention rate



£
s.
d.
£
s.
d.
£
s.
d.
£
s.
d.


1. British spirits (per proof gallon)
11
11
11

—


—


—



2. Imported spirits other than perfumed spirits—


(a) not comprised below in this paragraph (per proof gallon)

—

11
14
9
11
12
3
11
13
6


(b) liqueurs, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is not to be tested (per gallon)

—

15
17
0
15
13
8
15
15
4


each of the above rates of duty being, in the case of spirits not warehoused or warehoused for less than three years, increased by Is. 6d. per proof gallon or, for spirits within paragraph 2 (b) of this table, by 2s. 0d. per gallon.

In this table "Commonwealth rate" means the rate for goods qualifying for Commonwealth preference, and "Convention rate" means the rate for goods of Convention area origin within the meaning of the European Free Trade Association Act, 1960.—[Mr. Lloyd.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

TABLE OF RATES OF DUTY AND DRAWBACK




Customs rates (per 36 gallons)



Excise rates (per 36 gallons)
Full rate
Commonwealth rate
Convention rate





£
s.
d.
£
s.
d.
£
s.
d.
£
s.
d.


1. Duty
…
…
6
3
0
7
3
5
6
3
5
6
13
5


2. Drawback
…
…
6
3
2
7
3
2
6
3
2
6
13
2





each of the above rates of duty and drawback being, in the case of beer of an original gravity exceeding 1030 degrees, increased by 7s. 3½d. for each additional degree.

In this table "Commonwealth rate" means the rate for goods qualifying for Commonwealth preference, and "Convention rate" means the rate for goods of Convention area

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

2. BEER (CUSTOMS AND EXCISE)

Motion made, and Question,
That as from the tenth day of April, 1962, the duties of customs and excise in respect of beer, and the drawbacks of those duties, shall be charged or allowed at the rates set out in the following Table as if they were the rates provided for in Part I of the First Schedule to the Finance Act, 1959.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
origin within the meaning of the European Free Trade Association Act, 1960.—[Mr. Lloyd.]

put and agreed to.

3. WINE (CUSTOMS)

Motion made, and Question,
That as from the tenth day of April, 1962, the duties of customs chargeable on wine shall be charged at the rates set out in the following Table as if they were the rates provided for in the Third Schedule to the Finance Act, 1958. as amended by the Finance Act, 1960.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

TABLE OF RATES OF DUTY


Description of wine
Full rate (pergallon)
Commonwealth rate (per gallon)



£
s.
d.
£
s.
d.


Light wines:—


Still—


not in bottle

14
0

12
0


in bottle

16
6

13
6


Sparkling
1
6
6
1
4
6


Other wines:—


Still—


not in bottle
1
7
6

17
6


in bottle
1
10
0

19
0


Sparkling
2
0
0
1
10
0


together, in the case of wine exceeding 42 degrees proof spirit, with an addition for each additional degree or fraction of a degree of

2
2

1
4

TABLE I: Rates of customs duty (per pound)


Description of Tobacco
Full rate
Commonwealth rate
Convention rate



£
s.
d.
£
s.
d.
£
s.
d.


Tobacco unmanufactured—


containing 10 lbs. or more of moisture in every 100 lbs.weight thereof
3
10
10½
3
9
4
3
10
10½


containing less than 10 lbs. of moisture in every 100 lbs.weight thereof
3
11
10½
3
10
2
3
11
10½


Tobacco manufactured, viz.—


Cigars
4
0
9½
3
17
10½
3
19
4


Cigarettes
3
16
4½
3
14
0
3
15
2½


Cavendish or Negrohead
3
15
4½
3
13
1½
3
14
3


Cavendish or Negrohead manufactured in bond
3
13
4½
3
11
5
3
13
4½


Other manufactured tobacco
3
13
7½
3
11
8
3
12
8


Snuff and snuff work (including tobacco dust or powder and ground tobacco)—


containing more than 13 lbs. of moisture in every 100 lbs. weight thereof
3
12
10½
3
11
0⅜
3
11
11½


containing not more than 13 lbs. of moisture in every 100 lbs. weight thereof
3
15
4½
3
13
1½
3
14
3

In this table "Commonwealth rate" means the raite for wine qualifying for Commonwealth preference, and "light wine" means wine not exceeding 25 degrees or, in the case of wine qualifying for Commonwealth preference, 27 degrees of proof spirit.—[Mr. Lloyd.]

put and agreed to.

4. SWEETS (EXCISE)

Motion made, and Question,
That as from the tenth day of April, 1962, the duty of excise chargeable on sweets shall be charged at the rate of 1 Is. 6d. per gallon in the case of still sweets, and 17s. 6d. per gallon in the case of sparkling sweets.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

5. TOBACCO (CUSTOMS AND EXCISE)

Motion made, and Question,
That as from the tenth day of April, 1962, the duties of customs and excise in respect of tobacco, and the drawbacks of those duties, shall be charged or allowed at the rates set out in the following Tables ("Commonwealth rate" in those Tables meaning the rate for goods qualifying for Commonwealth preference, and "Convention rate" meaning the rate for goods of Convention area origin within the meaning of the European Free Trade Association Act, 1960).
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

TABLE II: Rates of excise duty (per pound)


Tobacco unmanufactured—
…
…
£
s.
d.


containing 10 lbs. or more of moisture in every 100 lbs. weight thereof
…
…
3
9
2


containing less than 10 lbs. of moisture in every 100 lbs. weight thereof
…
…
3
10
0


Tobacco manufactured, viz.—


Cavendish or Negrohead manufactured in bond
…
…
3
11
5

TABLE III: Rates of drawback per pound)


Description of Tobacco
In respect of tobacco on which customs duty at the full or Convention rate has been paid
In respect of tobacco on which customs duty at the Commonwealth rate or excise duty has been paid



£
s
d.
£
s
d


Cigars
3
15
2½
3
13
8


Cigarettes
3
11
10½
3
10
4


Cut, roll, cake or other manufactured tobacco
3
11
7½
3
10
1


Snuff (not being offal snuff)
3
12
1½
3
10
7


Stalks, shorts or other refuse of tobacco, including offal snuff
3
11
1½
3
9
7

—[Mr. Llovd.]

put and agreed to.

6. HYDROCARBON OILS, ETC. (RATES OF CUSTOMS AND EXCISE DUTIE AND REBATES)

Motion made, and Question,
That as from the tenth day of April, 1962, there shall be an increase of 3d. a gallon in the rate of the duty of customs on hydrocarbon oils; and the enactments fixing by reference to the rate of that duty the rates of the excise duties on hydrocarbon oils, power methylated spirits and petrol substitutes, and of the rebates of customs or excise duty on heavy oils, shall have effect accordingly.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. Lloyd.]

put and agreed to.

7. HYDROCARBON OILS (DEFINITION OF FUEL OILS)

Motion made, and Question,
That for the purposes of the customs and excise Acts the expression "fuel-oils" shall include any heavy oils which contain in solution an amount of hard asphalt of not less than one-tenth of one per cent. and of which the closed flash point is one hundred and fifty degrees centigrade or below (so that in respect of any such oils the rate of the rebate of customs duty shall, in accordance with section two of the Finance Act, 1961, be twopence, instead of threepence, less than the rate of the duty); and this shall have effect from the tenth day of April, 1962.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. Lloyd.]

put and agreed to.

8. POOL BETTING DUTY

Motion made, and Question,
That the rate of the pool betting duty on any bet made (whether before or after the passing of this Resolution) by reference to an event taking place on or after the tenth day of April, 1962, shall be 33 per cent. of the amount on which the duty is calculated, except in the case of a bet exempted by virtue of section fourteen of the Finance Act, 1948, from the increase under that section as being made by means of a totalisator set up on a dog racecourse.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. Lloyd.]

put and agreed to.

9. TELEVISION ADVERTISEMENT DUTY

Motion made, and Question.
That the television advertisement duty chargeable in respect of the insertion of an advertisement in a programme broadcast on or after the tenth day of April, 1962, shall be charged at the rate of 11 per cent., instead of one-tenth, of the amount of the payment for the insertion.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913.—[Mr. Lloyd.]

put and agreed to

10. MATCHES (CUSTOMS)

Motion made, and Question.
That as from the tenth day of April, 1962, the duties of customs charged on matches by section four of the Finance Act. 1951, shall


in the case of matches of Convention area origin (within the meaning of the European Free Trade Association Act, 1960) be charged at the rate of 19s. 7d. (instead of 19s. lid.) per 10,000 matches in containers in which there are not more than 30 matches, and at the rate of 14s. Id. (instead of 14s. 5d.) per 7,200 matches in containers in which there are more than 30 matches.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to

11. MECHANICAL LIGHTERS (CUSTOMS)

Motion made, and Question,
That, as from the tenth day of April, 1962, the duty of customs charged on mechanical lighters by section six of the Finance Act, 1928, shall in the case of mechanical lighters of Convention area origin (within the meaning of the European Free Trade Association Act. 1960) be charged at the rate of 6s. 6d. (instead of 7s. 0d.) or, in the case of a gas lighter, at the rate of 4s. 6d. (instead of 5s. 0d.).
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

12. SUGAR, ETC. (CUSTOMS AND EXCISE DUTIES AND DRAWBACKS)

Motion made, and Question,
That as from the tenth day of April, 1962, there shall not be charged any duty of customs or excise previously chargeable on sugar, molasses (including invert sugar), glucose or saccharin, except any duty of customs under the Import Duties Act, 1958 (nor shall any excise licence be required to manufacture in Great Britain sugar, glucose, saccharin or invert sugar), and the following provisions shall apply:—
1. Duties of customs on importation into the United Kingdom shall be charged—
(a) in respect of any sugar, invert sugar, glucose or saccharin not qualifying for Commonwealth preference at a rate equal to the amount of the general preferential reduction heretofore allowed for like goods qualifying for Commonwealth preference, except that—

(i) the rate for sugar of a polarisation exceeding 99° shall be as for sugar of a polarisation exceeding 98° but not exceed-99°; and
(ii) the rate for saccharin shall be 33⅓ per cent. ad valorem;
(b) in respect of sugar qualifying for Commonwealth preference, being sugar of a polarisation exceeding 99°. at the rate of 12·8d. per cwt.

2. Drawback allowable in respect of sugar produced in the United Kingdom from materials on which there has been paid a duty of customs in accordance with paragraph I above shall be as follows:—

(a) where the duty on the materials was paid in accordance with paragraph 1 (a) at a rate less than 6s. 10·8d. per cwt., and the sugar is of a polarisation exceeding 98°, the rate of drawback shall be 4s. 3⅓d. per cwt.:
(b) in any other case the drawback shall be of an amount equal to the duty chargeable on sugar of the like polarisation (the drawback being determined by reference to paragraph 1 (b) above if the duty on the materials was paid in accordance therewith).

3. Drawback shall not be allowable in respect of molasses (other than invert sugar) produced in the United Kingdom from materials on which duty was paid in accordance with paragraph 1 above, and any drawback of duty so paid allowable in respect of invert sugar so produced shall be of an amount equal to the duty paid on the materials
4. No drawback or other relief from duty on sugar, molasses (including invert sugar), glucose or saccharin shall be allowed under section two hundred and sixteen or two hundred and seventeen, or under paragraph (e) or (f) of subsection (1) of section two hundred and eighteen, of the Customs and Excise Act, 1952 (which relate to goods for use in certain manufactures or for the feeding of stock); and this shall apply both to duty paid in accordance with paragraph I above and to the duties previously chargeable.
5. The changes resulting from this Resolution in the duties on sugar or invert sugar, or in the drawbacks and other reliefs from those duties, other than the changes resulting from paragraph 4 above, shall not affect surcharges and surcharge repayments or distribution payments and repayments under the Sugar Act, 1956, and any Act giving effect to this Resolution may (with effect from the said tenth day of April) provide for surcharges under the Sugar Act. 1956, to continue to be made as if the duties on sugar and invert sugar had remained as they were immediately before that day, and apply for purposes of the surcharge any enactment then applicable for purposes of those duties.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

13. COCOA (CUSTOMS DUTIES AND DRAWBACKS)

Motion made, and Question,
That as from the tenth day of April, 1962, in lieu of the duties of customs chargeable under section two of the Finance Act. 1924, on cocoa, cocoa butter and cocoa husks and shells there shall be charged a duty of customs at the rate of 2s. 4d. per cwt. on cocoa or


cocoa butter imported into the United Kingdom and not qualifying for Commonwealth preference; and drawback of the duty so charged shall not be allowed under section two hundred and thirty-one of the Customs and Excise Act, 1952, on goods delivered or appropriated for use in the manufacture of theobromine.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

14. COFFEE (CUSTOMS DUTIES AND DRAWBACKS)

Motion made, and Question,
That as from the tenth day of April, 1962, the duties of customs chargeable on coffee under section three of the Finance Act, 1924, and on preparations consisting wholly or partly of extracts, essences or other concentrations of coffee or chicory under section two of the Finance Act, 1946, shall be charged at the rates shown in the first of the following Tables ("Commonwealth rate" there meaning the rate for goods qualifying for Commonwealth preference), and for roasted coffee and mixtures of roasted coffee and roasted chicory the rates of drawback of the duties chargeable under the said section three shall be the rates shown for those drawbacks in the second Table.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

TABLE I: Rates of duty (per cwt.)


Description of goods
Full rate
Commonwealth rate



s.
d.
s.
d.


Coffee, not kiln-dried, roasted or ground
9
4
nil


Coffee, kiln-dried, roasted or ground
12
6
9
4


Preparations consisting wholly or partly of extracts, essences or other concentrations of coffee or chicory (on the dry weight)
56
0
42
0

TABLE II: Rates of drawback


 Coffee,—


duty-paid at full rate.
9s 4d. per 100 lbs.


not duty-paid at full rate.
nil


Mixtures of coffee and chicory.
9s. 4d. per 100 lbs. exclusive of the weight of coffee not duty-paid at full rate.

—[Mr. Lloyd.]

put and agreed to.

15. CUSTOMS AND EXCISE DUTIES AND PURCHASE TAX (TERMINATION OF SURCHARGE)

Motion made, and Question,
That as from the tenth day of April, 1962, no liability to any duty or tax, or right to any drawback, rebate, allowance or other payment, shall be subject to any addition under section nine of the Finance Act, 1961, by virtue of any order of the Treasury made before that day.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913—[Mr. Lloyd.]

put and agreed to.

16. CUSTOMS AND EXCISE DUTIES AND PURCHASE TAX (POWER TO PROVIDE FOR SURCHARGES AND REBATES)

Motion made, and Question.
That the powers conferred by section nine of the Finance Act, 1961, shall be extended for a further year.—[Mr. Lloyd.]

put and agreed to.

17. PURCHASE TAX (RATES)

Motion made, and Question,
That as from the tenth day of April, 1962, but subject to any new Treasury order under section twenty-one of the Finance Act, 1948, the rates at which purchase tax is chargeable shall be altered as follows:

(a) the 50 per cent. rate, wherever now chargeable, shall become a rate of 45 per cent.; and
(b) the 12½ per cent. rate, wherever now chargeable, and the 5 per cent. rate, wherever now chargeable, shall each become a rate of 10 per cent.:
but this Resolution shall not authorise any alteration of a rate for some only of the goods to which that rate at present applies, except that any Act giving effect to this Resolution may alter the 5 per cent. rate for the whole of Groups 1, 2, 7 and 8 (clothing etc.), without altering it in Groups 6, 11 and 16 (furniture etc.), or vice versa.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Lloyd.]

put and agreed to.

18. PURCHASE TAX (EXTENSIONS OF CHARGEABLE GOODS)

Motion made, and Question put,
That as from the first day of May, 1962, but subject to any new Treasury order under section twenty-one of the Finance Act, 1948, purchase tax at the rate of 15 per cent. of the


value of the goods shall be charged in respect of goods of the classes comprised in the Groups set out in the Annex to this Resolution, as if those Groups were added to Part I of the Second Schedule to the Finance Act, 1958; and any Act giving effect to this Resolution may include provision for securing that, where on or after that day chargeable goods, being beverages or products for the preparation of beverages, are appropriated or applied to the production of beverages which are not purchase tax goods, the appropriation or application shall be treated as if it were a chargeable purchase (" purchase tax goods" meaning for this purpose goods of any description from time to time comprised in Part I of the said Second Schedule).
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

ANNEX

GROUP 34
comprising Chocolates, sweets and similar confectionery (including drained, glacé or crystallised fruits); and chocolate biscuits and other confectionery having a case or coating of chocolate couverture, but not including cakes in such a case or coating.
Articles not comprised below in this 15% Group.

Exempt

(1) Chocolate couverture not pre-pared or put up for retail sale.
(2) Drained cherries.
(3) Candied peels.

GROUP 35


(a) Manufactured beverages, including fruit juices and bottled waters, and syrups, concentrates, essences, powders, crystals or other products for the preparation of beverages, but not including beverages or products in the list set out at the end of this Group.
15%


(b) Containers of gas for the preparation of carbonated beverages.
15%

Goods not comprised in paragraph(a)

1. Beverages chargeable with any duty of customs or excise specifically charged on spirits, beer, wine or sweets, and preparations thereof.
2. Tea, maté, herbal teas and similar products, and preparations and extracts thereof.
3. Cocoa, coffee, and chicory and other roasted coffee substitutes, and preparations and extracts thereof.
4. Preparations and extracts of meat, yeast, egg or milk.

GROUP 36


Ice-cream, ice lollies, water ices and similar frozen products, and prepared mixes and powders for making such products.—[Mr. Lloyd.]
15%

The Committee divided: Ayes 331. Noes 219.

Division No. 158.]
AYES
[5.16 p.m.


Agnew, Sir Peter
Bryan, Paul
Digby, Simon Wingfield


Aitken, W. T.
Buck, Antony
Doughty, Charles


Allan, Robert (Paddington, S.)
Bullard, Denys
Drayson, G. B.


Allason, James
Bullus, Wing Commander Eric
Duncan, Sir James


Amery, Rt. Hon. Julian
Burden, F. A.
Eccles, Rt. Hon. Sir David


Arbuthnot, John
Butcher, Sir Herbert
Eden, John


Ashton, Sir Hubert
Butler, Rt. Hn. R. A. (Saffron Walden)
Elliot, Capt. Walter (Carshalton)


Atkins, Humphrey
Campbell, Gordon (Moray & Nairn)
Elliott, R. W. (Nwcastle-upon-Tyne, N.)


Balniel, Lord
Carr, Compton (Barons Court)
Emery, Peter


Barber, Anthony
Carr, Robert (Mitcham)
Errington, Sir Erlc


Barlow, Sir John
Cary, Sir Robert
Erroll, Rt. Hon. F. J.


Barter, John
Channon, H. P. G.
Farey-Jones, F. W.


Batsford, Brian
Clark, Henry (Antrim, N.)
Farr, John


Beamish, Col. Sir Tufton
Clark, William (Nottingham, S.)
Fell, Anthony


Bell, Ronald
Clarke, Brig. Terence (Portsmth, W.)
Flnlay, Graeme


Bennett, F. M. (Torquay)
Cleaver, Leonard
Fisher, Nigel


Bennett, Dr. Reginald (GOS &Fhm)'
Cole, Norman
Fletcher-Cooke, Charles


Berkeley, Humphry
Collard, Richard
Foster, John


Bevins, Rt. Hon. Reginald
Cooke, Robert
Fraser, Hn. Hugh (Stafford & Stone)


Bidgood, John C.
Cooper, A. E.
Fraser, Ian (Plymouth, Sutton)


Biffen, John
Cooper-Key, Sir Neill
Freeth, Denzil


Biggs-Davison, John
Cordeaux, Lt.-Col. J. K.
Galbraith, Hon. T. G. D.


Bingham, R. M.
Cordle, John
Gammans, Lady


Birch, Rt. Hon. Nigel
Corfield, F. V.
Gardner, Edward


Bishop, F. P.
Costain, A. P.
George, J. C. (Pollok)


Black, Sir Cyril
Coulson, Michael
Gibson-Watt, David


Bossom, Cllve
Courtney, Cdr. Anthony
Gilmour, Sir John


Bourne-Arton, A.
Craddock, Sir Beresford
Glover, Sir Douglas


Box, Donald
Critchley, Julian
Glyn, Dr. Alan (Clapham)


Boyd-Carpenter, Rt. Hon. J.
Crowder, F. P.
Glyn, Sir Richard (Dorset, N.)


Boyle, Sir Edward
Cunningham, Knox
Goodhart, Philip


Braine, Bernard
Curran, Charles
Goodhew, Victor


Brewis, John
Currle, G. B. H.
Gough, Frederick


Bromley-Davenport, Lt. -Col. Sir Walter
Dalkeith, Earl of
Gower, Raymond


Brooke, Rt. Hon. Henry
Dance, James
Grant, Rt. Hon. William


Brooman-White, R.
d'Avigdor-Goldsmid, Sir Henry
Grant-Ferris, Wg. Cdr. R.


Brown, Alan (Tottenham)
Deedes, W. F.
Green, Alan


Browne, Percy (Torrlngton)
de Ferranti, Basil
Gresham Cooke, R.




Grosvenor, Lt.-Col. R. G.
MacArthur, Ian
Robertson, Sir D.(C'thn's & S'th'td)


Gurden, Harold
McLaren, Martin
Rodgers, John (Sevenoaks)


Hall, John (Wycombe)
McLaughlin, Mrs. Patricia
Roots, William


Hamilton, Michael (Wellingborough)
Maclay, Rt. Hon. John
Ropner, Col. Sir Leonard


Hare, Rt. Hon. John
Maclean, SirFitzroy (Bute&N. Ayrs.)
Royle, Anthony (Richmond, Surrey)


Harris, Frederic (Croydon, N. W.)
Macleod, Rt. Hn. lain (Enfield, w.)
Russell, Ronald


Harris, Reader (Heston)
MacLeod, John (Ross & Cromarty)
St. Clair, M.


Harrison, Brian (Maldon)
McMaster, Stanley R.
Sandys, Rt. Hon. Duncan


Harrison, Col. Sir Harwood (Eye)
Macmillan, Rt. Hn. Harold (Bromley)
Scott-Hopkins, James


Harvey, Sir Arthur Vere (Macclesf'd)
Macmillan, Maurice (Halifax)
Seymour, Leslie


Harvey, John (Walthamstow, E.)
Macpherson, Niall (Dumfries)
Sharples, Richard


Harvie Anderson, Miss
Maddan, Martin
Shaw, M.


Hay, John
Magginis, John E.
Skeet, T. H. H.


Heald, Rt. Hon. Sir Lionel
Maitland, Sir John
Smith, Dudley (Br'ntfd & Chiswick)


Heath, Rt. Hon. Edward
Manningham-Buller, Rt. Hon. Sir R.
Smithers, Peter


Henderson, John (Carthcart)
Markham, Major Sir Frank
Smyth, Brig. Sir John (Norwood)


Hendry, Forbes
Marlowe, Anthony
Spearman, Sir Alexander


Hicks Beach, Maj. W.
Marples, Rt. Hon. Ernest
Speir, Rupert


Hill, Dr. Rt. Hon. Charles (Luton)
Marshall, Douglas
Stanley, Hon. Richard


Hill, Mrs. Eveline (Wythenshawe)
Marten, Neil
Stevens, Geoffrey


Hinchingbrooke, Viscount
Matthews, Gordon (Meriden)
Steward, Harold (Stockport, S.)


Hirst, Geoffrey
Maudling, Rt. Hon. Reginald
Stodart, J. A.


Hobson, Sir John
Mawby, Ray
Stoddart-Scott, Col. Sir Malcolm


Hocking, Philip N.
Maxwell-Hyslop, R. J.
Storey, Sir Samuel


Holland, Philip
Maydon, Lt.-Cmdr. S. L. C.
Studholme, Sir Henry


Hollingworth. John
Mills, Stratton
Summers, Sir Spencer (Aylesbury)


Hope, Rt. Hon. Lord John
Miscampbell, N.
Talbot, John E,


Hopkins, Alan
Montgomery, Fergus
Tapsell, Peter


Hornby, R. P.
Moore, Sir Thomas (Ayr)
Taylor, Sir Charles (Eastbourne)


Hornsby-Smith, Rt. Hon. Dame P.
More, Jasper (Ludlow)
Taylor, Edwin (Bolton, E.)


Howard, John (Southampton, Test)
Morgan, William
Taylor, Frank (M'ch'st'r, Moss Side)


Hughes, Hallett, Vice-Admiral John
Morrison, John
Teeling, Sir William


Hughes-Young, Michael
Mott-Radclyffe, Sir Charles
Temple, John M.


Hulbert, Sir Norman
Nabarro, Gerald
Thatcher, Mrs. Margaret


Hurd, Sir Anthony
Neave, Airey
Thomas, Leslie (Canterbury)


Hutchison, Michael Clark
Nicholls, Sir Harmar
Thomas, Peter (Conway)


Iremonger, T. L.
Nicholson, Sir Godfrey
Thompson, Kenneth (Walton)


Irvine, Bryant Godman (Rye)
Noble, Michael
Thompson, Richard (Croydon, S.)


Jackson, John
Nugent, Rt. Hon. Sir Richard
Thorneycroft, Rt. Hon. Peter


James, David
Oakshott, Sir Hendrie
Thornton-Kemsley, Sir Colin


Jenkins, Robert (Dulwich)
Orr, Capt. L. P. s.
Tiley, Arthur (Bradford, W.)


Jennings, J. C.
Orr-Ewing, C. Ian
Tilney, John (Wavertree)


Johnson, Dr. Donald (Carlisle)
Osborn, John (Hallam)
Touche, Rt. Hon. Sir Gordon


Johnson, Eric (Blackley)
Osborne, Sir Cyril (Louth)
Turner, Colin


Johnson Smith, Geoffrey
Page, Graham (Crosby)
Turton, Rt. Hon. R. H.


Jones, Rt. Hn. Aubrey (Hall Green)
Page, John (Harrow, West)
Tweedsmuir, Lady


Joseph, Sir Keith
Panned, Norman (Kirkdale)
van Straubenzee, W. R.


Kerans, Cdr. J. S.
Partridge, E.
Vane, W. M. F.


Kerby, Capt. Henry
Pearson, Frank (Clitheroe)
Vaughan-Morgan, Rt. Hon. Sir John


Kerr, Sir Hamilton
Peel, John
Vosper, Rt. Hon. Dennis


Kershaw, Anthony
Percival, Ian
Wakefield, Sir Waved (St. M'lebone)


Kimball, Marcus
Peyton, John
Walder, David


Kirk, Peter
Pike, Miss Mervyn
Walker, Peter


Kitson, Timothy
Pilkington, Sir Richard
Wall, Patrick


Lagden, Godfrey
Pitman, Sir James
Ward, Dame Irene


Lambton, Viscount
Pitt, Miss Edith
Watkinson, Rt. Hon. Harold


Lancaster, Col, C. G.
Powell, Rt. Hon. J. Enoch
Webster, David


Langford-Holt, Sir John
Price, David (Eastleigh)
Wells, John (Maidstone)


Leather, E. H. C.
Price, H. A. (Lewisham, W.)
Whitelaw, William


Leavey, J. A.
Prior-Palmer, Brig. Sir Otho
Williams, Dudley (Exeter)


Leburn, Gilmour
Profumo, Rt. Hon. John
Williams, Paul (Sunderland, S.)


Lewis, Kenneth (Rutland)
Proudfoot, Wilfred
Wills, Sir Gerald (Bridgwater)


Lilley, F. J. P.
Pym, Francis
Wilson, Geoffrey (Truro)


Lindsay, Sir Martin
Quennell, Miss J. M.
Wise, A. R.


Linstead, Sir Hugh
Ramsden, James
Wolrige Gordon, Patrick


Litchfield, Capt. John
Redmayne, Rt. Hon. Martin
Wood, Rt. Hon. Richard


Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Rees, Hugh
Woodhouse, C. M.


Lloyd, Rt. Hon. Selwyn (Wirral)
Rees-Davies, W. R.
Woodnutt, Mark


Longbottom, Charles
Renton, David
Woollam, John


Longden, Gilbert
Ridley, Hon. Nicholas
Worsley, Marcus


Loveys, Walter H.
Ridsdale, Julian



Lucas, Sir Jocelyn
Rippon, Geoffrey
TELLERS FOR THE AYES:


Lucas-Tooth, Sir Hugh
Roberts, Sir Peter (Heeley)
Mr. Chichester-Clark and


McAdden, Stephen

Mr. J. E. B. Hill.




NOES


Abse, Leo
Bennett, J. (Glasgow, Bridgeton)
Braddock, Mrs. E. M.


Ainsley, William
Benson, Sir George
Brockway, A. Fenner


Albu, Austen
Blackburn, F.
Butler, Herbert (Hackney, C.)


Awbery, Stan
Blyton, William
Butler, Mrs. Joyce (Wood Green)


Bacon, Miss Alice
Boardman, H.
Callaghan, James


Baird, John
Bottomley, Rt. Hon. A. G.
Castle, Mrs. Barbara


Baxter, William (Stirlingshire, W.)
Bowden, Rt. Hn. H. W. (Leics, S. W.)
Chapman, Donald


Beaney, Alan
Bowles, Frank
Collick, Percy


Bellenger, Rt. Hon. F. J.
Boyden, James
Corbet, Mrs. Freda







Craddock, George (Bradford, S.)
Irving, Sydney (Dartford)
Proctor, W. T.


Cronln, John
Janner, Sir Barnett
Pursey, Cmdr. Harry


Crosland, Anthony
Jay, Rt. Hon. Douglas
Randall, Harry


Cullen, Mrs. Alice
Jeger, George
Rankin, John


Darling, George
Jenkins, Roy (Stechford)
Redhead, E. C.


Davies, G. Elfed (Rhondda, E.)
Johnson, Carol (Lewisham, S.)
Reld, William


Davies, Harold (Leek)
Jones, Rt. Hn. A. Creech (Wakefield)
Reynolds, G. W.


Davies, Ifor (Gower)
Jones, Dan (Burnley)
Rhodes, H.


Deer, George
Jones, Jack (Rotherham)
Roberts, Albert (Normanton)


Delargy, Hugh
Jones, J. Idwal (Wrexham)
Robertson, John (Paisley)


Dempsey, James
Jones, T. W. (Merioneth)
Robinson, Kenneth (St. Pancras, N.)


Diamond, John
Kelley, Richard
Ross, William


Dodds, Norman
Kenyon, Clifford
Royle, Charles (Salford, West)


Driberg, Tom
Key, Rt. Hon. C. W.
Shinwell, Rt. Hon. E.


Dugdale, Rt. Hon. John
Ledger, Ron
Silverman, Julius (Aston)


Ede, Rt. Hon. C.
Lee, Frederick (Newton)
Silverman, Sydney (Nelson)


Edelman, Maurice
Lee, Miss Jennie (Cannock)
Slater, Mrs. Harriet (Stoke, N.)


Edwards, Rt. Hon. Ness (Caerphilly)
Lever, Harold (Cheetham)
Slater, Joseph (Sedgefield)


Edwards, Robert (Bilston)
Lever, L. M. (Ardwick)
Small, William


Edwards, waiter (Stepney)
Lewis, Arthur (West Ham, N.)
Smith, Ellis (Stoke, S.)


Evans, Albert
Lipton, Marcus
Snow, Julian


Fernyhough, E.
Loughlin, Charles
Sorensen, R. W.


Finch, Harold
Lubbock, Eric
Soskice, Rt. Hon. Sir Frank


Fitch, Alan
Mabon, Dr. J. Dickson
Spriggs, Leslie


Fletcher, Eric
McCann, John
Steele, Thomas


Foot, Dingle (Ipswich)
MacColl, James
Stonehouse, John


Foot, Michael (Ebbw Vale)
McKay, John (Wallsend)
Stones, William


Forman, J. C.
Mackie, John (Enfield, East)
Strauss, Rt. Hn. G. R. (Vauxhall)


Fraser, Thomas (Hamilton)
McLeavy, Frank
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Gaitskell, Rt. Hon. Hugh
MacMillan, Malcolm (Western Isles)
Swain, Thomas


Galpern, Sir Myer
MacPherson, Malcolm (Stirling)
Swingler, Stephen


George, LadyMeganLloyd (Crmrthn)
Malialieu, E. L. (Brigg)
Symonds, J. B.


Cinsburg, David
Mallalieu, J. P. W. (Huddersfield, E.)
Taverne, D.


Gooch, E. G.
Manuel, Archie
Taylor, Bernard (Mansfield)


Gourlay, Harry
Mapp, Charles
Thomas, lorwerth (Rhondda, W.)


Greenwood, Anthony
Marsh, Richard
Thompson, Dr. Alan (Dunfermline)


Grey, Charles
Mason, Roy
Thomson, G. M. (Dundee, E.)


Griffiths, David (Rother Valley)
Mayhew, Christopher
Thornton, Ernest


Griffiths, Rt. Hon. James (Llanelly)
Millan, Bruce
Thorpe, Jeremy


Griffiths, W. (Exchange)
Milne, Edward
Timmons, John


Grimond, Rt. Hon. J.
Mitchison, G. R.
Tomney, Frank


Gunter, Ray
Monslow, Walter
Wade, Donald


Hale, Leslie (Oldham, W.)
Moody, A, S.
Wainwright, Edwin


Hall, Rt. Hn. Glenvil (Colne Valley)
Mort, D. L.
Warbey, William


Hamilton, William (West Fife)
Moyle, Arthur
Watkins, Tudor


Hannan, William
Mulley, Frederick
Weitzman, David


Harper, Joseph
Neal, Harold
Wells, Percy (Faversham)


Hart, Mrs. Judith
Noel-Baker, Rt. Hn. Phllip (Derby, S.)
Wells, William (Walsall, N.)


Hayman, F. H.
Oliver, G. H.
Whitlock, William


Henderson, Rt. Hn. Arthur (RwlyRegis)
Oram, A. E.
Wigg, George


Herbison, Miss Margaret
Oswald, Thomas
Wilkins, W. A.


Hewitson, Capt. M.
Owen, Will
Willey, Frederick


Hill, J. (Midlothian)
Padley, W. E.
Williams, D. J. (Neath)


Hilton, A. V.
Paget, R. T.
Williams, LI. (Abertillery)


Holman, Percy
Parglter, G. A.
Williams, W. R. (Openshaw)


Holt, Arthur
Parker, John
Willis, E. G. (Edinburgh, E.)


Houghton, Douglas
Parkin, B. T.
Wilson, Rt. Hon. Harold (Huyton)


Howell, Denis (Small Heath)
Paton, John
Woodburn, Rt. Hon. A,


Hoy, James H.
Pearson, Arthur (Pontypridd)
Woof, Robert


Hughes, Cledwyn (Anglesey)
Peart, Frederick
Wyatt, Woodrow


Hughes, Emrys (S. Ayrshire)
Pentland, Norman
Yates, Victor (Ladywood)


Hughes, Hector (Aberdeen, N.)
Plummer, Sir Leslie
Zilllacus, K.


Hunter, A. E.
Popplewell, Ernest



Hynd, H. (Accrington)
Price, J. T. (Westhoughton)
TELLERS FOR THE NOES:


Irvine, A. J. (Edge Hill)
Probert, Arthur
Mr. Rogers and Mr. Lawson.

19. PURCHASE TAX (GOODS PRODUCED FOR MANUFACTURER'S USE)

Motion made, and Question,
That purchase tax shall be charged in respect of any chargeable goods made or produced for use in or in connection with a business, where the goods are made or produced by or to the order of the person carrying on the business.—[Mr. Lloyd.]

put and agreed to.

20. PURCHASE TAX (DRUGS AND MEDICINES)

Motion made, and Question,
That provision shall be made for enabling any drug or medicine to be temporarily exempted from purchase tax by direction of the Commissioners of Customs and Excise.—[Mr. Lloyd.]

put and agreed to.

21. INCOME TAX (CHARGE AND RATES FOR 1962–63)

Motion made, and Question,
That income tax for the year 1962–63 shall be charged at the standard rate of seven shillings and ninepence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess as Parliament may hereafter determine.
And it is hereby declared that is is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. Llovd.]

put and agreed to.

22. INCOME TAX (PERSONAL RELIEFS)

Motion made, and Question.
That—

(a) in section fifteen of the Finance Act, 1952 (relief for persons under sixty-five with small incomes) for the references to three-hundred pounds (the income limit for the full relief) there shall be substituted in all places references to four hundred pounds, and (as regards the marginal relief)—

(i) for the reference to four hundred and five pounds (the income limit for the marginal relief) there shall be substituted a reference to five hundred and fifty pounds; and
(ii) for the reference to two-fifths (the fraction governing the marginal relief) there shall be substituted a reference to one-half;

(b) in section thirteen of the Finance Act, 1957 (relief for persons over sixty-five with small incomes)—

(i) for the references to two hundred and seventy-five pounds and four hundred and forty pounds (the income limits for exemption) there shall be substituted references to three hundred pounds and four hundred and eighty pounds respectively; and
(ii) for the reference to fifty-five pounds (the excess over those limits by reference to which relief by reduction of tax is limited) there shall be substitued a reference to seventy-five pounds;

but this Resolution shall not require any change to be made in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act, 1952, before the twenty-second day of June, nineeteen hundred and sixty-two.
And it is hereby declared that is is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913—[Mr. Lloyd.]

put and agreed to.

23. INCOME TAX (GAINS FROM ACQUISITION AND DISPOSAL OF ROPERTY.)

Motion made, and Question,
That provision shall be made for charging persons disposing of property of any description (including shares, debentures, debts and other incorporeal property) to income tax in respect of gains arising or treated as arising to them from the acquisition and disposal of the property, other than gains which accrue as profits of a trade, profession, vocation, office of employment, and in that connection provision may be made for bringing into the charge as a disposal the receipt or realisation of a debt or security on its repayment or redemption, the appropriation of property for any specified purpose, and other cases, and for bringing into the charge as disposals by a person disposals made by a nominee or trustee for him, and for other incidental matters.—[Mr. Lloyd.]

put and agreed to.

24. INCOME TAX (LAND DEALINGS)

Motion made, and Question,
That further provision be made far charging income tax in connection with disposals of land by a company connected with other persons who have or have had dealings in land, or have had an interest in companies having dealings in land, or by a person connected with another person who is in business as a builder (including any business which extends to the erection of securing the erection of buildings).—[Mr. Lloyd.]

put and agreed to.

25. INCOME TAX (SALES ETC., OF INTERESTS IN COMPANIES OTHER THAN SHARES)

Motion made, and Question,
That further provision be made in connection with sections twenty-one to twenty-three and twenty-eight of the Finance Act, 1960, with respect to the construction ot references to shares or to securities, and with respect to the amounts to be treated as income by virtue of sections twenty-one to twenty-three.—[Mr. Lloyd.]

put and agreed to.

26. INCOME TAX (CANCELLATION OF TAX ADVANTAGES FROM TRANSACTIONS IN SECURITIES)

Motion made, and Question,
That further provision be made with respect to the operation in relation to transactions in securities of section twenty-eight of the Finance Act, 1960, in cases where tax advantages are obtained or obtainable by virtue of section twenty (subvention payments) of the Finance Act, 1953, or in connection with a fall in the value of securities, or in connection


with the liquidation of a company, and in cases of husband and wife living together.—[Mr. Lloyd.]

put and agreed to.

27. PROFITS TAX (APPLICATION OF INCOME TAX CHARGES)

Motion made, and Question,
That provision shall be made for treating as profits chargeable to the profits tax any such amounts as may be made chargeable to income tax by any Act of the present Session relating to Finance, or similar amounts, and in particular gains accruing or treated for purposes of income tax as accruing from the acquisition and disposal of property.—[Mr. Lloyd.]

put and agreed to.

28. ESTATE DUTY (PROPERTY SITUATE OUT OF GREAT BRITAIN)

Motion made, and Question,
That estate duty shall be charged in respect of immovable property situate out of Great Britain, and further provision shall be made for the recovery of estate duty in respect of property so situate (whether movable or immovable) by means of a charge on any property or otherwise.—[Mr. Lloyd.]

put and agreed to.

29. INCIDENTAL AND CONSEQUENTIAL CHARGES (INCOME TAX, ESTATE DUTY AND STAMP DUTIES)

Motion made, and Question.
That charges of the following descriptions may be imposed in connection with provisions designed in general to afford relief from taxation, that is to say,—

(a) any charge to income tax that may result if section twenty of the Finance Act, 1954 (which enables account to be taken of capital allowances on claims for loss relief), is amended so that the loss claimed for any year is related to the allowances for a later year, and in connection therewith loss claims for the year 1962–63 cannot be made by reference to the allowances for that year, or relief given is made recoverable if afterwards found not to be due;
(b) any charge to income tax that may result from provisions for making effective or extending double taxation relief in relation to dividends and other payments by a company or body of persons;
(c) any charge to estate duty that may result from increasing to £4,000 the value below which estates are not chargeable with duty;
(d) any charge to estate duty that may result if further relief is given from double taxation in relation to estate duty and duty leviable under the law of any territory on or by reference to death, including a charge resulting from the withdrawal, in connection

with that further relief, of any other relief from such double taxation;
(e) any charge to stamp duty that may result if the ad valorem stamp duty chargeable on settlements as such is repealed or restricted, and in connection therewith certain settlements become or are made chargeable with duty under some other head.—[Mr. Lloyd.]

put and agreed to.

30. TITHE ANNUITIES (REDEMPTION)

Motion made, and Question,
That new provision shall be made as to the compulsory redemption of annuities under the Tithe Acts, 1936 and 1951, in cases where there is a change of ownership of land in respect of which an annuity is charged.—[Mr. Lloyd.]

put and agreed to.

31. AMENDMENT OF THE LAW

Motion made, and Question proposed.
That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.—[Mr. Lloyd.]

5.35 p.m.

Mr. Hugh Gaitskell: I rise, in accordance with the tradition of the House, to offer the Chancellor of the Exchequer our congratulations on the statement he has just delivered. As he knows, the congratulations relate more to the form than to the substance of the statement, and on that I gladly accord to him our appreciation of the fact that he has again made a relatively brief speech. I do not think that it exceeded 1½ hours, following the excellent example which he himself set last year.
The right hon. and learned Gentleman covered quite a lot of ground and dealt with some rather complicated matters, but he presented his case with clarity. Where I failed to follow him. I would not reproach him; it is simply that it is now becoming so long since I was Chancellor of the Exchequer and it would require some other change to be brought about in order to put that right.
This is a "no-change" Budget in the sense that there is neither an increase nor a decrease in the revenue which the right hon. and learned Gentleman hopes to achieve. In that respect, the Budget follows the pattern of 1958—that is to say, not the Budget immediately preceding the General Election but the one before that.
Today there was, of course, one novelty—an election promise, or a Budget promise to come in before the next General Election, was made to the Committee. That is rather a surprising thing to do, and I should have thought that the right hon. and learned Gentleman, before making a statement of this kind, would have been able to explain, even a little, exactly what he had in mind. I was not entirely clear as to whether he himself simply thought that he was going to abolish Schedule A. If that is his intention, at least we should be told about it and be clear about it.
The right hon. and learned Gentleman seemed to hint that he might put something in its place, but he made his announcement without giving any idea of what was in his mind, and this was rather surprising. I cannot help wondering whether perhaps his colleagues, when they heard his proposals, said that they were a little too sour and dull for the public generally and particularly for the Conservative Party, and that in the light of certain byelection results and Conservative failures recently it was necessary to do something to improve the morale of the party.
No doubt my right hon. and hon. Friends will deal with these matters in greater detail than I can now. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) will be making the major opening speech from our side in the debate tomorrow, and, as usual, it is my purpose only to give, as briefly as I can, the immediate reactions of the Opposition.
We welcome some of the changes proposed, particularly the changes, minor but nevertheless valuable, in direct taxation. We particularly appreciate the small income relief and the age exemption relief changes which the right hon. and learned Gentleman has made, and which follow precisely proposals put forward by the Opposition during the

passage of the 1961 Finance Act. Even if we could not get these things then, it is nice to have them now.
We will also certainly support him in his efforts to prevent evasion. The most important change of that kind is that relating to Estate Duty, which will stop, I think, this habit of acquiring land abroad and remaining domiciled at home but nevertheless getting away with paying little or no Estate Duty. It may lead to a certain number of people moving abroad, but, if they are that sort of person, perhaps it does not matter a great deal.
I suppose that the most important change is the capital gains tax. I am not sure that we can rightly call it that after what the right hon. and learned Gentleman said. He began that passage of his speech by emphasising that he did not believe in a capital gains tax and would not offer anything of the kind. Nevertheless, I think that we can regard this at least as a small step in the right direction.
The Chancellor said that ordinary people found it hard to distinguish the purchasing power which accrues to individuals as a result of capital gains, if I may use those words, from ordinary income. I think he was quite right. We have said it for many years. But then, when he came to his actual proposals and announced that the tax was only to apply to transactions completed within six months, my immediate thought was that ordinary people will find it very hard to distinguish between a profit made in six months minus a day and a profit made in six months plus a day. It is all very well to say that this is speculation and that is not, but I do not know how the line will be drawn in equity at all.
Frankly, I cannot imagine many people paying the tax. It is just as well that the Chancellor said that yield was not the main purpose of it. There will not be very much yield. Certainly, it will be extraordinarily foolish if a man who is liable to high rates of Surtax engages in transactions within the six months when, by hanging on a little, he can avoid the tax altogether. Seriously, this will not make any substanial difference to the real grievance.
The real grievance is not simply that people make short-term capital gains but that, year by year, those who own


securities, in the main, so long as they are reasonably well invested, even without any special knowledge, can count on something like a 10 per cent. appreciation per annum. [HON. MEMBERS: "Oh."] Yes. I do not know whether hon. Members are saying that they have never made 10 per cent. per annum or that it does not exist. They have only to look at the rise in share values to see that it is so. They themselves know perfectly well that what I am saying is correct. It is a fact of experience during the last few years.
What the tax will do is not to relieve the sense of grievance which is naturally felt by those who pay heavy taxation on income, particularly on earned income, as against those who pay no taxation at all on capital profits beyond the six months. It will merely stop a limited amount of intensive gambling in a short period. It will do that, I am sure; but I do not believe that this meets the need of the situation at all.
As for the change in indirect taxation, I am not sure that we should be enthusiastic about the Chancellor's consolidation of last year's surcharge. When he brought it in last year, it did not occur to any of us, I think, that the changes then introduced were to be consolidated in the tax law within a year. Many people will be asking themselves, now that the changes are consolidated into the tax law, whether it is at all likely that we shall ever get rid of them again. Of course, I realise the difficulty that the original surcharge had to be charged—I think I am right—at the same rate across the board on everything and, therefore, if the Chancellor wished to discriminate this year between one item covered by the surcharge and another he had to have some change of this kind. Nevertheless, I think it regrettable, and I do not believe that it is at all what was thought of last year, whether it is what he intended or not.
The more serious point on which we disagree is his handling of the Purchase Tax. We disagree basically on this, for a simple reason. We regard the Purchase Tax as a tax which should be confined as far as possible to luxury articles. We have always thought that, and we have tried to reduce the Purchase Tax on articles more in the nature of necessities while retaining it on those

more of a luxury character. The Chancellor says that he does not want to exercise a moral judgment, by which, I suppose, he means that he does not like having to decide what is a necessity and what is a luxury.
It is impossible for the Chancellor to avoid a moral judgment. When all is said and done, if it were really his view that he should not exercise a moral judgment, he would logically, I suppose, have to apply the Purchase Tax to everything bought by consumers. But we do not apply it to books. We do not apply it to food, except to ice cream now, and we do not apply it to a number of items which, happily, still remain exempt from Purchase Tax. He cannot avoid this decision. Therefore, I cannot accept the argument that, on these grounds, it was necessary to broaden the basis of the tax.
I do not myself think that it was necessary to raise any additional money this year by this means. I shall return to this in a few minutes. If the Chancellor had wished to reduce the Purchase Tax rates, I should not have objected. There would be an argument for that, perhaps, as compared with taking the surcharge off. It would mean reducing the tax on certain articles on which the Purchase Tax was levied, while leaving it at its present higher rate on alcohol and tobacco. There might be a case for that. But I do not believe that, in order to bring the tax down on motor cars, refrigerators and the other things he mentioned, there was any justification or need for increasing the 5 per cent. level to 10 per cent. Nor do I think it was necessary in the least to bring in confectionery, soft drinks and ice cream.
I do not know whether the Chancellor still holds that he is not exercising a moral judgment. He might have argued that what he has done was necessary in the interests, perhaps, of slimming—no doubt, it will help a little in that direction—or that sweet eating is bad for children's teeth, or something like that. However, unless one is prepared to bolster one's case with arguments like that, the plain fact remains—let us face it—that what he has done in the redistribution of tax within the Purchase Tax range is to impose tax, in the main, on


people more heavily where they have smaller incomes and less heavily where they have not.
I turn now to the basic question which lies behind the Budget today, the state of the economy and whether the Budget is rightly attuned to the needs of the country. Although we have not had the report itself, we have read recently in the newspapers about the report of the O.E.C.D. on our record in recent years. My goodness—what a damning indictment of Government policy it contains. No doubt, my right hon. and hon. Friends will be following this up in greater detail. I say only this. The stark fact—which comes out in our own Economic Survey, too—is that during the past two years the rise in production in this country has been no more than 2 per cent., and, according to the Survey, the rise in productivity in these two years has been nil. In other words, the rise in production is more than accounted for by the increase in the amount of labour employed.
In my view, it is not entirely an accident that this two-year period, as the Survey itself admits, coincides fairly closely with the period of restrictions. It came just after they were imposed. They were, of course, increased last, summer, but they started before then. I cannot help feeling that the Chancellor paid far too little attention in his speech today, as he has done on other occasions, to the problem of production. Not only have we had no rise in productivity over two years, but since July the level of industrial production in this country has actually fallen. The Chancellor may claim that he could not help that, and he had to impose the restrictions because of the balance of payments. I am not sure about that. I venture the opinion that some of the measures he took last July were probably not justified by the circumstances.
In the first place, we tend to muddle up far too much—'this is a complaint I have against the Treasury nowadays—the capital account and the current account of the balance of payments. They are very different things. Last year's crisis was to a very large extent a crisis on capital account. For that reason, I should not myself oppose a

sharp increase in Bank Rate as a necessary means of dealing with it; but that is not to say that it was necessary to impose deflationary policies over a wide field.
Secondly, we have to remember that even when we talk about the balance of payments on current account there is one item in it which might be described at capital—certainly it would be in the strict accounting sense—and that is the movement of stocks. It is as clear as daylight that on several occasions since the war when we have had a large increase in our imports it has been associated with a stocking-up process. One ought to try to make allowance for that when one is judging the seriousness of the balance of payments situation.
I am not saying that there was nothing wrong. That would be absurd. I am suggesting that the Chancellor seemed to me to have overweighted the dangers of the situation last July and to have applied remedies which I believe were unnecessarily severe. Not only that, but the consequence of these so-called remedies is inevitably that we have had reduced production. This surely is of crucial importance.
It is all very well to talk about the danger of income inflation and the necessity of a pay pause or wage restraint. The Chancellor knows very well that I understand these problems and that on the basic issue of the need for relating incomes to productivity and production there is no dispute between us. But I suggest that it is a great mistake to concentrate on the wages and to forget about the productivity. The plain fact is that what we should be doing is to concentrate on labour costs, and the trouble is that when there is a fall in production, even if there is no rise in wages, the wage costs go up. If the Chancellor takes, even during recent years, the movement of labour costs in 1959 and the first part of 1960, he will find that although incomes were rising labour costs were falling. In the last six months, although we have had certainly a slower rate of increase in incomes, the decline in production has pretty well offset that.
Let me say to him on the pay pause that our criticism of him is not about his mentioning the basic problem. It is about the way in which he has handled this problem. We believe that, first of


all, the main point should be to concentrate on increasing production and increasing productivity. Secondly, we believe that we have to do this by agreement and that we cannot get a satisfactory agreement here unless it is agreed with the unions. Thirdly, we believe that one will not get that agreement if one's policies seem to be unfair and arbitrary, as the Government's have been in recent months.
Broadly, that is our reaction to the Budget. The Chancellor spoke of the rise in consumption which he expected. He did not give much evidence for that. This has been a surprising feature of his speech, and it is certainly contrary to most forecasts in the various journals which go in for this sort of thing. I hope that we shall hear a little more from him about why he thinks that the rate of consumer spending will go up by as much as 4 per cent. in the course of the year.
For my part, I do not believe that the capital gains tax will do in the least what the Chancellor professes that he wishes to do—set at rest the fears and the grievances which people who are heavily taxed on their earned incomes still feel. I do not think that his rearrangement of the Purchase Tax is fair, nor do I think that it was necessary to impose the additional taxation. Finally, I believe that this Budget errs on the side of being too little expansionist at a moment when the crucial thing is to increase production and, with it, to increase exports too.

5.54 p.m.

Mr. E. H. C. Leather: It is a pleasure to follow the Leader of the Opposition in his annual exercise in which, in the very kindest way, he always makes it clear to us that had he been running our affairs he would have raised more revenue from less taxation. This is perhaps because, as he himself said, he is getting a little out of practice at forming Budgets, but I hope that that is a position which we shall be able to maintain for a great many years to come, with all kindness to the right hon. Gentleman.
I should like to say immediately, in commenting on his remarks, that I find myself in the unusual but happy position of agreeing entirely with what he said about mixing up capital and current income

accounts. I am sure that this is very important. The Chancellor has once again made it clear this afternoon that, despite the overpowering weight of expert advice which must be constantly telling him that it is not possible to do anything about anything, he preserves his enthusiasm for reform and making major changes in our utterly antiquated tax structure. I hope that during the course of the debates there will be recurrent pressure on him to turn his mind to this question, because I am quite sure that the Leader of the Opposition is right. Our national finances are complicated enough in all conscience, and to have capital items thrown in quite fortuitously sometimes makes them almost unintelligible.
I think that I am right in saying that we have been in a position for nearly five years in which our Budget has been stronger and had a better current surplus proportionately than almost any other country in the world, but because we insist on throwing in capital items, we constantly give a much weaker impression than is justified. Over the last five years we have thrown in the capital accounts of the nationalised industries, oddly enough at the precise moment when we took out the capital accounts of the local authorities. I believe that neither of them belongs in the Budget, and if the Chancellor will turn his reforming zeal to this facet and perhaps develop a completely separate capital account Budget, presented to us quite separately and dissected from current account transactions, I think that that would help us enormously and would help the outside world to understand what we are doing. It would give a truer reflection of our position. Within reason, I should be happy in this respect to co-operate with the Leader of the Opposition.
My impressions of the Budget—and I am grateful for the opportunity of being the first on this side of the Committee to say it—are, overall, rather different from those of the Leader of the Opposition. There is one major reservation which I have in mind and to which I shall turn later. But my first impression—and I have been thinking about nothing else in a fairly concentrated way for the last half-hour—is that this has been a very courageous Budget. It has demonstrated once again the courage


and intellectual integrity of my right hon. and learned Friend.
What I find particularly encouraging about it is that it is the most reforming Budget, or shows the signposts to most reforms of any Budget speech; which we have had for a good many years. I am naturally delighted that the Chancellor has at long last accepted the view which has been predominantly held in this party for many years and has pointed the way to the abolition of Schedule A. This is good for two reasons. It is frankly party political; we as a party have always said that Schedule A on owner-occupiers was a bad and unjustified tax. I am glad that he has finally accepted that view.
I am glad for another reason: it seems to me that it must be a victory of the Chancellor over his advisers, for we know that their unanimous opinion has been to the contrary for many years. Frankly, I have much more confidence in the Chancellor than I have in his advisers. It is an extraordinary thing about that building in Great George Street—that one knows many eminent and able men who make tremendous sense in whatever walk of life they follow until they are put in the Treasury. They then seem to lose all contact with reality. I think the fact that the Chancellor has clearly said to them, "This will be done", and has not allowed them to talk him out of what he thought ought to be done is tremendously encouraging.

Mr. Loughlin: I appreciate the hon. Gentleman's point, but what I cannot understand is how he can appreciate the Chancellor's intentions for next year in the context of this year's Budget. Perhaps he will explain.

Mr. Leather: Perhaps the answer to the hon. Gentleman is that I was listening a little more attentively than he was.

Mr. Loughlin: Let us hear it.

Mr. Leather: Let the hon. Gentleman read the Chancellor's speech in the morning. He will see it quite clearly there.
The Chancellor, in my view, got the short-term capital gains tax absolutely right. The Opposition have a vested interest in trying to pretend that he did

not and in trying to see that class hatred and bitterness are kept alive, but I do not believe that they will have much luck in doing that.
There was one point which I should like to register and about which I ask my right hon. Friend the Chief Secretary to the Treasury for some clarification. If I took down what he said correctly, the Chancellor said that he would grant "allowance for proper and relevant expenses incurred." In other words, that such expenses would be taken into calculating the capital gain. I hope that I am right in assuming that that means the inclusion of such things as Stamp Duty. It would be utterly wrong and unfair for the Government to catch a chap three ways at the same time, by taking off the Stamp Duty at both ends. It is an essential part of the gain, an essential cost, and I hope that I am right in understanding the phrase to mean that it will be allowed in assessing the actual tax liability.
This tax fits in precisely with what the Chancellor said last year, and it has been the theme of my party for many years—that what we have to do is to struggle to reduce the tax on work. This is a tax on luck. I have no scruples about this, for I do not see anything un-Conservative about taxing luck. We must continue to press on with reducing the tax on work, and I hope that that will continue to be an important part of the Chancellor's incomes policy. On three occasions the Government have reduced the standard rate of Income Tax, and from time to time we have raised many other allowances. We must continue to allow a person who earns money to keep more of his own earnings in his own pocket. I am sure that that is essential to any sound economic policy, especially while we are talking about increasing productivity and encouraging people to export more and to work harder. We cannot talk about those things if at the same time we are to make it perfectly clear that those who are a little bit too successful will be hit on the head.

Mr. Hector Hughes: What has the hon. Gentleman to say about the Chancellor's imposition on the children and workers by taxing the sugar which gives them their energy? Does he also praise that?

Mr. Leather: I think that the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) has got the brief a little wrong. The tax on sugar was brought down. Perhaps he will be happy to leave it there.
I turn now to Corporation Tax. The Chancellor made it perfectly clear—at least, I hope that it was clear: he nailed his colours to the mast—that he has now accepted that the direct taxation system on industry in this country is completely anomalous. It is complicated and it ties the incomes of companies and individuals together in a way which serves no useful purpose, except, I understand, the convenience of the Inland Revenue. My right hon. and learned Friend said that the Inland Revenue was "seeking possible solutions". I hope and pray that what it is doing is "seeking possible solutions" and not, as I fear, building up a hefty brief to go back to the Chancellor and tell him that nothing can be done. I cannot help feeling that if the advice and sound and solid argument which we get from the Treasury had been available for the first chapter of Genesis, it would have been quite sufficient to convince the Almighty that Creation should never have been undertaken in the first place.
The Chancellor also said that he would "come back and report further in due course". I hope very much that that "reporting further in due course" means in the reasonably near future. It would be eminently desirable, if it were possible, for the Chancellor to make some statement about this matter before we finish with this year's Finance Bill. I have in mind the relevancy of this tax to the negotiations about the European Common Market, which, presumably, will reach some kind of climacteric this summer, because our basic company tax structure is completely out of line with that of the Continent of Europe which has clearly been making considerable strides towards harmonisation. If I understand the matter aright, it is impossible for us even to begin any harmonisation until such time as we have changed over to a corporation tax. It has many advantages of flexibility which are now denied to us, and I hope that the Chancellor will allow nothing to slow down his researches and his enthusiasm in that direction.
I want now to say a few words about some details of the Budget. I strongly support my right hon. and learned Friend in his views about the Excise taxes and particularly about leaving the tobacco tax where it is. I support him not merely because of the views which I happen to hold in another controversy, about the merits of smoking, but for a further reason. Anyone who advocates that we should seriously put a penal duty on cigarettes—and there are some in various parts of the House who do—should consider the effect on and reactions of a number, at which it is hard to guess, but which I judge to be not fewer than 2 million, female old-age pensioners. I wonder how they would feel if they were told by any Government that they could switch over to pipes and cigars? It is only a very few years ago that the Government decided to remove a special token which allowed pensioners to buy tobacco products cheaply, and at that time I did not hear any hon. Member opposite, nor anyone in another place, say that we should have done that earlier in order to discourage old-age pensioners from having the benefits of their cigarettes. Indeed, some of the speeches to which we had to listen at that time were couched very much in the opposite vein.
Finally, I come to the subject of the Purchase Tax changes. I commit myself to supporting the Chancellor's changes in Purchase Tax, including the tax on sweets and drinks, although one of the largest chocolate factories in the country is in my own constituency. I think that this increase is reasonable and right. The economic effect on the industries and on the young people who buy these products, of an extra halfpenny or penny per bottle or bar, will not be very large, but it does what successive Governments have advocated and seldom had the courage to do—broaden the base of the Purchase Tax. There is no logical reason why these products should ever have bean exempted. They were exempted purely because it was wartime when the tax was introduced and these things were Chen either not produced or were rationed. It was purely by historical accident that they were originally left out and I think that my right hon. and learned Friend is absolutely right now to include them.
I now turn to what my right hon. and learned Friend himself described as


his main interest—exports and adjusting our economy and fiscal system so as to stimulate the export drive. I have great sympathy with -my right hon. and learned Friend. There has seldom been a time when the economic barometers have been so confusing, or when all the eminent economists in the country have been putting forward such completely different views and remedies. The only thing which I cannot resist saying is that it is fair to say that no group of economists has been so consistently wrong as the Treasury.
There was a reference in a newspaper the other day—I do not know whether the Chancellor of the Exchequer read it—recommending—and I think rightly—that if he ever gets an odd Saturday evening off he should watch that excellent Perry Mason television series. It must be that he is getting a little tired of playing poor old Hamilton Berger, following false trails of evidence consistently laid down for him by Lieutenant Tragg in the Treasury. I am not sure that there is not a good deal of truth in the analogy and I hope that my right hon. and learned Friend will study it.
The Chancellor of the Exchequer has said time and again—and I do not think that there is any argument politically or in any other way against it—that exports are the key to the problem. My right hon. and learned Friend referred to the Report of the Federation of British Industries. I agree with the F.B.I. Report. I agree that it and the Chancellor are right in saying that there is no good looking for any more gimmicks. The E.C.G.D., the trade promotion service of the Board of Trade and all these other things that are offered are, in my view—and I spend my working life amongst them—as good as those of any other country, and most of the complaints from exporters evaporate when one studies them.
But here I must take issue with my right hon. and learned Friend and ask him to look again at the F.B.I. Report, because he is not correct in saying that the Report said that there was nothing more that the Government could do in this direction. This seems to me to show that once again—perhaps naturally—my right hon. and learned Friend did not have time to read the Report, but un-

doubtedly read a brief prepared for him by his experts who conveniently left out the most important paragraph in the Report. The No. 1 recommendation on home policy in the Report—and I speak only from memory—was that the Government should make an urgent study of fiscal policy to see whether it was not here that the damage was being done to our exports.
I am sorry that the Chancellor made no reference to that, because I believe that it is the most important part of the export problem which we now face. Everyone who has studied this problem has come ultimately to the same conclusion, that our fiscal system, our system of direct taxation of companies, is uniquely disincentive, and in this way differs from that of our major competitors abroad. There is the German turnover tax which has been referred to time and again, and the French Taxe Valeur Ajoutée, T.V.A., as it is referred to. Are these things being studied? There is no doubt that they are an incentive to exports.
Having spent many years studying this, it seems to me that the position can be summarised very briefly indeed. We all know—and there is nothing that we can do to change the fact—that export sales and export deliveries are inevitably more costly to a manufacturer than home sales and deliveries. The cost of sending salesmen abroad, the cost of translations, the cost of adjusting, packaging and so on for the export trade inevitably means that on a level price the exporter must get less net profit on an export sale than on a home sale.
But in Germany, in France, in Italy and in Japan the tax system is deliberately adjusted to reverse this process. Frenchmen, Germans, Italians and Japanese—and there are probably others whose systems I have not had a chance to study—deliberately adjust their company tax system so that the exporter gets slightly more net profit on an export deal than on a home deal. This is surely the key to the problem. It is not very much more. It is only 2 to 3 per cent. more, but the basic fact is that the English exporter is, and must continue to be, at a direct disadvantage; he must continue to have a direct financial disincentive in relation to his competitors, purely because of the way in which his tax is assessed.
I hope and pray that the Treasury will face this, and that Ministers will tell us that they have some really serious study going on of this problem, because at the moment our export position is not improving, and we all know it. The Chancellor, with the greatest good will in the world, has nothing but good will to support his hope that exports will get better, and today he did not say a word about what we were doing about them. I am sure that exports are the key to our whole financial situation. Exports of another two or three hundred million pounds a year could revolutionise the whole Budget problem. We could be finished with restrictions and all these worries and constant headaches about our balance of payments if we had this shot in the arm from exports.
People from every walk of life who have studied it have all come to the conclusion that the root of the problem lies in our taxation system. I hope, therefore, that my right hon. Friend the Chief Secretary to the Treasury will make a careful point of this and tell us that the Government have some plan to deal with this problem, and will not go on trying to confuse the issue with statistics and complicated arguments when it all boils down to the simple fact that on an export deal a foreign exporter gets a better net profit than we do solely because of taxation; solely because of something that is entirely within the Government's control.
I have one further query. I hope that I am not being ungracious if the tone is wrong, I should like to go back and say how good I think the Budget is and congratulate my right hon. and learned Friend for introducing it. But I should like just to question once again this whole doctrine of restriction. My right hon. and learned Friend used the phrase that "growing home demand must be carefully watched to keep the way clear for growth in exports". This is the essence of the whole doctrine of restricting home demand to see that there is capacity available for exports. I wonder whether this is really true? I know that it is the doctrine of the experts in the Treasury, but when one stops looking at the overall averages and statistics, and gets down to facts, I wonder whether there is any ground for believing that this economic doctrine is not in fact as dead as the dodo?
I wonder whether my right hon. and learned Friend, or perhaps his right hon. Friend the President of the Board of Trade, could tell the House of a single company that was ever kicked into the export market because its trade in the home market was made more difficult? I suggest to my right hon. and learned Friend that what happens is that this "on again—off again" process has happened so many times that when home demand is restricted the good exporter goes on working just as hard to export—the only thing is that he is a bit angry about what has happened, and things are a little more difficult for him—and the bad exporters, those who cannot be bothered, or do not want to, simply cut back production and say, "Wait for six months and it will be off again and we can then start from where we were before".
I suggest to my right hon. and learned Friend that if he gets into industry, into sales conferences, or on to the shop floor, he will find that that is what happens 99 times out of 100. There are a few people who are so inefficient that they may go broke, but the vast majority who do not want to get pushed into the export market say, "Cut back production Profits will be down this year, but what does it matter, because the tax collector takes half of it anyway? The Government cannot keep this restriction on for long, and then we will be right back where we started".
I suggest that the only effect of these restrictive measures is to make life even more difficult for the good exporter, by forcing up costs. Furthermore, the more mechanised and modern and tooled-up a manufacturer becomes the higher are his overheads and the more essential it is that he should operate at his maximum capacity. The manufacturer with old-fashioned plant, who is using a lot of labour inefficiently, has a smaller overheads-to-labour ratio, and he can lay off a few men in difficult times and probably even keep up his profit. The modern manufacturer, with the largest fixed overheads, is most hardly hit, and must inevitably be the first to suffer from rising costs through the restriction of his home market. I hope that the Treasury will give this matter more serious consideration.
My right hon. and learned Friend was quite right in saying that we have a great


opportunity for exports ahead of us, but the atmosphere must be created by the Government and the best two things they can do are, first, to allow industry to have a clearer run—not by throwing the brakes away, as we did some years ago, but by relaxing a restrictive policy—and; secondly, to plan our direct taxation system so as to remove the positive brake, or disincentive, which is now inhibiting British exports and doing major damage to our economy. We all hope that the Chancellor will be allowed to succeed in his policy.

6.22 p.m.

Mr. Ellis Smith: For many years I have said that economic organisation should be taken out of the hands of the Treasury and also that it is extremely urgent to improve Government economic publications and to provide statistical information at least equal to that of other countries. I congratulate the Treasury officials, especially those who must have worked very hard behind the scenes, upon reaching the present standard of publication, as shown in the documents provided for Members of Parliament and other students of financial and economic-matters.
These publications, together with all the statistical information provided, bear favourable comparison with any others in the world. Information and statistics of this kind are not produced without a great deal of work behind the scenes. The men and women who are engaged upon this work are never identified, and when great changes are made for the better in these matters we ought to give credit where it is due and make it clear that the House of Commons has taken note of their good work, in order to encourage them in the future.
The logic of this development is the need for real planning. On that matter I differ fundamentally from many of my hon. Friends and from most hon. and right hon. Members opposite. For about twenty years I have said that the time has arrived for us to plan our economy in harmony with scientific developments in this country and throughout the world. I make every allowance for the many shades of political opinion that exist among us, but although we may differ in our respective approaches to the

problem and in relation to the extent to which this policy should be applied we cannot but admit that there is an unanswerable case, in the mid-twentieth century, for a proper planning of our economy in order to obtain the best results.
That is why I say that there is an urgent need to take the control of our economic affairs out of the hands of the Treasury and to place it in the hands of a mid-twentieth century organisation—a Ministry of Production and Economic Planning. Fox over ten years, at General Election after General Election, Conservative candidates have said that they would reduce national expenditure and taxation. That is why so many people who are better off than most of us are becoming disillusioned with the Government. Each successive General Election has produced a betrayal of the promises made in the previous one.
I charge the whole House with some responsibility for our difficulties. We have continued to perpetuate the eighteenth century Monk Resolution, and the application of virement. When manufacturers are producing exports to keep us all going they must have regard to every penny of the cost of production and to overhead charges, but each July the House has acquiesced to the application of the eighteenth century policy of virement.
The Chancellor said that we should now be able to increase our exports. I hope that he is right. He said that we could reasonably expect an increase in world demand for our exports. If that is so, I hope that we shall organise ourselves to take advantage of this in a better way than we have done in the past.
The Chancellor went on to say that, as a result of the work of the new National Economic Development Council, he hoped that we would be able to obtain a faster and more continuous expansion of our economy. I hope that we shall be able to do that, and I shall produce evidence to support the necessity for doing so later. The Chancellor also said that we should aim at an ambitious but realistic target, and it was good to hear a Conservative Chancellor saying that, with the acquiescence of his supporters.
The right hon. and learned Gentleman then dealt with Purchase Tax. I have said over and over again that that tax has now become a revenue tax, especially in respect of the export industry. The Chancellor later said that he proposed to reduce Purchase Tax on motor cars. According to the Financial Statement with which we have been provided we shall spend £1,721 million this year on war preparations and defence. This is an increase of £79 million. We are going to reduce the taxation on motor cars at a time when we are placing new burdens of taxation upon children and continuing to impose the prescription charge upon invalids, who are suffering through no fault of their own.
We have arrived at a situation in which, as happened a few months ago, an hon. Member can go to Manchester and have the audacity to make the type of speech which he made on that occasion about there being no longer any need to talk about the class war. Our present situation is riddled with examples of class warfare, as I shall produce evidence to prove. It is time that these facts were brought into the open.
In its latest issue the Economist makes reference to the results of our economic policy. It states that the greatest discouragement is the continued decline in the British share of world trade. I agree with the Chancellor and his supporters that we must exert ourselves to increase our volume of exports and to obtain a greater percentage of world trade. Our hope of progress in this country will fade unless we can achieve those two objectives. I am able to make that statement because for many years I have advocated constructive proposals which are to an increasing extent, but within limits, being accepted by the Conservative Party and by others. Therefore, I accept the logic of the analysis of our relationship with world trade provided by the Economist.
The responsibility for the decline in our share of world trade and for the uneasiness which is felt regarding our volume of exports should be placed squarely and solidly on the shoulders of those who have mismanaged our economy, particularly during the last eleven years. The indictment does not come from Socialists. It may be found in the columns of yesterday's Observer. There may be found extracts from the

survey of the United Kingdom prepared by the Organisation for Economic Cooperation and Development. I could quote example after example from that article but for the fact that I wish to devote my time to discussing other important matters, but in yeserday's Observer may be found evidence to support the terrible indictment which could be levelled against those who are responsible for eleven years of mismanagement of our economy.
The Economic Survey, with which we were presented last week, stressed the necessity for increasing exports to ensure prosperity and with that I wholeheartedly agree. But do the Government accept that proposition? Do hon. Members opposite accept it? If so, it means that we must adopt a policy to maximise our exports. Every other need should be subordinated to that. Will the Prime Minister issue a directive to his Ministers to give priority to matters affecting the export trade? If the right hon. Gentleman is prepared to do that, and if the Government really mean business, priority will be given to those areas where there are firms engaged in the export trade.
To carry such a policy to a logical conclusion will require an investigation into a situation which has resulted in the strangulation of export business due to high overhead charges associated with the importation of raw materials. This handicap places the firms in the export industry in the position of having to compete, as it were, with one hand tied. It is necessary to maintain the best possible labour relations among the workers engaged in the export industry. Such a policy would result in a dynamic advance. It would enable us to make the same progress as was shown during the war years. I know my fellow workers well enough to be able to say that.
In order to improve the morale of men and women engaged in the export trade I ask for a more positive and constructive economic approach and a policy which will result in maximising our production. For twenty years I have taken part in debates in this Chamber and advocated economic planning, often in the face of "iceberg-like" opposition. There was a period when for a few months, and in association with some of


the greatest intellects working behind the scenes, I had an opportunity to labour for the implementation of this policy. It was opposed during that period by anarchists of all political parties, by businessmen big and small and by those who preferred to put their individual interest before the welfare of the country.
A book to be published—"Paper Tigers"—will provide the latest condemnation of the economic outlook of those Conservative anarchists, and after twenty years as a Member of the House I am a more convinced Socialist than ever. Where Socialist ideals and collective ideas are applied by men and women who really mean business, the best results are obtained. We could achieve in this country in peace-time the same results as were achieved during the war years, were individual and business interests subordinated and the welfare of the country put first, as happened during the war.

Sir Cyril Osborne: The hon. Gentleman said that where Socialist principles were being most rigidly applied they were producing the best results. Less than two years ago I was in China where Socialist principles are being tersely applied and there is a great deal of poverty.

Mr. Ellis Smith: I will answer the hon. Gentleman because his intervention must be given an answer. He has made a very serious statement. It will take time for me to answer.
First, let us be accurate. I did not say where Socialist principles have been "rigidly applied". I did say where they have been satisfactorily applied. Certain people in this country were supposed to be applying the principles of nationalisation. But I know the way in which nationalisation was actually applied in certain cases, and that is why I am on my guard when I use phraseology of this kind. The hon. Member should hang his head in shame for quoting China. If he really believes in what he says when he goes with my hon. Friends and others to places like the Free Trade Hall in Manchester, he will admit before I have finished my speech that there is a great deal to be said for my point of view.
The only difference between us is that I belong to the class which was treated

like millions of people in China were treated, but it was a matter of degree. The hon. Gentleman knows that there are millions of men and women in China as good as any of us who have never had a real chance in life. He knows that China was subject to foreign intervention, foreign wars and civil wars.

The Deputy-Chairman (Sir Robert Grimston): Order. The hon. Gentleman has been drawn astray. We cannot discuss the position of China.

Mr. Ellis Smith: Thank you, Sir Robert. The hon. Member was trying to be clever, but he has been put in his place nicely now, as he has been by the Labour Party in particular, and as he will be by the country, for the way he has been responsible for some of the terrible events which has happened outside.
Yesterday's Observer contained the following statistics: 0·5 per cent. of the adult population owns 27 per cent. of the personal wealth; 1 per cent. of the adult population owns 35 per cent. of the personal wealth; 1·5 per cent. of the population owns 42 per cent. of the personal wealth; 2 per cent. of the population owns 46·5 per cent. of the personal wealth; and 2·5 per cent. of the adult population owns 52·5 per cent. This is an indication of the tiny minority which owns half Britain's wealth.
This matter should have been dealt with this afternoon when appeals were made for greater output and more exports. It will have to be dealt with before there are satisfactory relations between those who produce, those who live in working-class areas, and those who live in the areas of the tiny minority. One of the best memoranda I have ever read on this was given to me nearly twenty years ago by my right hon. Friend the Leader of the Opposition. He has taken a special personal interest in the maldistribution of this country's wealth. As my right hon. Friend is so fully informed on this matter, I cannot understand why the Labour Party has not pursued the matter more vigorously in the past few years.
The Conservative Party, reflecting itself through the Conservative Government, is now applying its traditional classic policy of making the workers


pay for our difficulties. If anyone doubts one word of my speech, he should go to the Vote Office or the Library and obtain the Government Blue Book. He should look at Table 11 on page 7 and make an analysis. He will find that during the last decade this country's gross national product and increased by 90 per cent. Consumers' expenditure has increased by only 76 per cent. Government expenditure has increased by 101 per cent.
These figures require further analysis and explanation. Who produces the gross national product? In the main it is those engaged in industrial areas. Who spends the greatest proportion of the total consumers' expenditure? It is not the workers, because in the main they take home only just enough to live on, have a holiday and keep going. The logic of these official figures is that inflation has not been caused by excessive incomes but by lack of control and regulation of our economy and excessive Government expenditure. I am the first to fear inflation, because I was in Germany in the Army of Occupation after the First World War when inflation reached a hitherto unknown height. I know the dangers of inflation. I emphasise that in this country inflation has not been caused by excessive incomes but by lack of control and regulation of our economy and excessive Government spending.
The pay pause is not designed to curb inflation. It is designed to carry out the promises made by the Government to the International Monetary Fund. Only one paragraph in the Government White Paper relates directly to profits and dividends, whereas almost every paragraph refers to the need to restrict wages and earnings. The White Paper is an attack on wages which is consistent with the Tories' classic policy of making the workers pay when the country is in difficulties.
I speak for the most highly skilled men in industry. I speak with a touch of bitterness because of the way that we have been treated in two world wars. We had to work as men had never worked before to help to save the country. I do not complain of that. What I complain of is the way we have been treated since then. The engineering industry is now responsible for at least 60 per cent. of

the country's exports. The Government are playing with fire in their attitude towards the engineering industry. There has been no pay pause in mining nor, relatively speaking, on the railways and in certain other sections of industry. However, the engineering industry has not had one penny. That is why there was complete unanimity about the two day strikes. There was a united stoppage on those two days such as had not happened hitherto in this country.
This is an indication of what the result of the mass vote now being taken could be. A long dispute in the engineering industry could be catastrophic. The Government should take steps to prevent this and put relationships on a better footing. They should save the industry and the country so that there will be no stoppage in the engineering industry.
The logic of the Government's ten-year policy is that they have failed to plan our economy. Hon Members opposite constantly interrupted and opposed us when we were putting forward our constructive proposals for planning. It is now pleasing to see that within fairly narrow limits, they are beginning to propose a certain amount of planning. This afternoon, the Chancellor of the Exchequer also suggested that targets should be fixed.
The explanation of the Government's policy has been to carry out their undertaking to the International Monetary Fund, to make the workers pay for the difficulties, to carry out a policy of monetary deflation and to carry out a policy through the pay pause—and many unseen economies have been made, like those on the welfare foods of the mothers and children. Now, similar proposals are being made to tax the same people's sweets, to tax the medicines that they want and to tax the foods on which invalids rely, such as preparations and extracts of meat, yeast, eggs and milk.
Therefore, while making my indictment of the Government's economic policy, I join with the Chancellor in pleading for an increase in exports and for carrying that to its logical conclusion with real planning. I hope that this step forward that is being taken will result in better control and regulation of our economy than in the past.

6.52 p.m.

Mr. A. E. Cooper: The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) has the one great virtue of never using one word where two will suffice. Nevertheless, he still continues to fight the battles of fifty years ago, battles that have long since been won and lost. Knowing how assiduous the hon. Member is in his duties in the House of Commons. I wonder what he has been doing in the last generation. There really have been changes in society since the war. There really has been a considerable upgrading in the standard of living of every man, woman and child.
I do not suggest that that has come about entirely as a result of the activities of a Conservative Government. There is no doubt that the Labour Government had things to do which they thought were right and from which undoubtedly the nation benefits. But let us not always keep going back half a century. It does nobody any good, and I am sure that the country is heartily sick and tired of hearing one party say what the other did twenty-five years ago.
What we are anxious to know today is what we will do for the future and to try to learn from some of the things which have taken place in the past. That is the duty of the House of Commons. I make one point only to the hon. Member for Stoke-on-Trent, South. When he refers to the inflation of the past few years, I merely make the point that since the war the greatest period of inflation was during the time of the Labour Government. That is all I wish to say about the hon. Member's speech.

Mr. Loughlin: I appreciate the hon. Member's reference to people being a bit tired of what took place fifty years ago. Does he not begin to accept that people are getting equally tired of the reiteration of what took place in 1945? In his last few words, the hon. Member himself could not resist looking back to what happened under a Labour Government.

Mr. Cooper: If the hon. Member had not been so impetuous, he would have realised that I said I was making one point, and one only, in answer to the observations of his hon. Friend. I have nothing more to say about the past. I want to deal entirely with the future.
Both the Leader of the Opposition and my hon. Friend the Member for Somerset, North (Mr. Leather) have talked about how we appear to have become muddled, in our balance of payments, with capital and revenue payments. They wished that we could split these items to give a better appreciation of our actual position. On paper, I suppose, that would be so. The facts are that however we make these payments overseas, whether on capital account or on revenue account, the money has to be found from our trading position and this is reflected in the monthly state of our gold and dollar reserves.
To divorce the two and to attempt to tell the country that, because the one is capital and the other is revenue, the situation is not really as bad as would appear, is not unlike the man who has an overdraft and who says to his bank manager, "I am spending £50 a month on my revenue requirements and £50 a month on my capital account." The bank manager is surely entitled to say—as, indeed, are the overseas bankers when thinking about the affairs of this country—" Very well, you can engage in this sort of dual activity provided that your income is capable of matching that expenditure."
The fact is that over a period of years our revenue from all sources overseas has not matched the expenditure which we were imposing upon it. The crisis of the last year, and probably the crises that we have had over a number of years, have been crises of the nation trying to do too much and stretching its resources beyond its ability. Nobody would seriously deny that.
The Labour Party and the Liberal Party are somewhat dishonest in talking simply about productivity, production and, in a loose way, growth, as if all our problems would be solved simply by increasing productivity. That is not so. My right hon. and learned Friend the Chancellor of the Exchequer could cause production to rise literally overnight if it were in the national interest for that to be done. The nub of our problem, however—and I assure the hon. Member for Stoke-on-Trent, South that this is not something which has just dawned on a few people—is what always has been, and always will be, the nub of the country's problem, and


that is our ability to export in sufficient quantity to pay for the imports which we need to sustain a high and rising standard of living. This is the A.B.C. of economic facts of life today We cannot get away from it.
We could increase our productivity by £1,000 million or, probably, by £2,000 million a year without any trouble, but to do so by £1,000 million would require £250 million of extra exports and £2,000 million would need £500 million of extra exports to correspond with the amount of imports that we would need. If right hon. and hon. Members are prepared to take a chance and say, "Very well, we will have this additional £1,000 million and, in consequence, improve our position in the export markets", that is at least an argument, but I do not believe that it is a sound one. The real problem is our ability to sell in overseas markets, and it is not always within our own hands to be able to increase our sales in other countries.
I spend a lot of time trying to sell goods abroad and I know some of the problems that are involved. One could spend a year or two in building up inside a market and getting one's goods accepted in the face of the most fierce competition from all sorts of foreign competitors. Then, just as one is ready to get an order, the country in which one has been building up runs into a balance of payments difficulty and the market is cut off.
That does not happen only in foreign countries; Commonwealth countries take the same action to protect themselves. We all know of the action that Australia has had to take on two or three occasions in the last two or three years to protect herself, and those actions have had serious effects on certain of our manufacturing industries. I therefore beg hon. Members opposite not always to talk in terms of an increase in production and an increase in productivity as if that were the answer to our problem—

Mr. Sydney Silverman: The beginning?

Mr. Cooper: It might be the beginning of the answer, and it is because I think that it is the beginning of the answer that I believe that this Budget will, over the years, prove to be a first-class one. In fact, it is probably one

of the most far-seeing, far-reaching and inventive Budgets that we have seen in a long time, and hon. Members opposite will be very surprised tomorrow when they read the comments of the financial editors of the general Press—[HON. MEMBERS: "Taxing sweets."] The trouble with many hon. Members opposite is that they cannot get their minds above a sweet lolly. Other factors are involved in running a country.
We are likely to spend some very long nights during the summer on what will probably prove to be one of the longest Finance Bills on record. We shall have some Amendments to put forward on certain aspects of it—

Mr. John McKay: I am interested in what the hon. Gentleman is saying. He is putting problems to us that make us begin to think. He says that he is not particularly fond of the idea that the solution of the international problem is a matter of production, individual and collective. What about prices? For instance, if we could reduce the price of our goods by 10 per cent., would it make any difference to international trade?

Mr. Cooper: There are many factors that help in getting markets, and holding on to them. Price is an important consideration. Delivery is a very important consideration, and we have not been helped over the last few years by the activities of certain of our trade unionists. They have done Britain a very great deal of damage overseas. In particular, Ted Hill and his Boilermakers' Union have a very heavy cross to bear for many years to come with regard to the shipbuilding industry's difficulties.
The lesson of this Budget is very simple. It is that exports are our first priority; that we must have sufficient elbow room within the economy in order to have the goods available to sell abroad. That is the first lesson to be learnt, and I am sure that this Budget will succeed in doing just that.
There are one or two things about the Budget and its presentation that are open to very severe criticism in the House and in the country as a whole. No reference at all is made to the control of Government expenditure. No mention whatsoever is made of the nationalised


industries, or to the part that local authorities should be expected to play. I must tell my hon. Friend the Economic Secretary that we cannot expect the country as a whole to give wholehearted support to policies of restraint all the way round when the Government, the nationalised industries and the local authorities go on spending as hard as ever they can.
What system of budgetary control operates in the Government Departments? We would all accept without question that in a country such as ours, where there is a very high level of expenditure and a very complex form of society, errors in estimating either revenue or expenditure are to be expected. We would be very churlish if we thought that the Treasury could budget to within about plus or minus £5 million in one year. I think that it was my hon. Friend the Member for Somerset, North who talked of the Treasury's errors since the end of the war. It is a very illuminating exercise to study the out-turn of figures of every Budget since the end of the war; the volume of errors is quite astonishing. One wonders just how much confidence we can place in Treasury estimating.
I should like to see the Treasury impose on the spending Departments a very serious system of budgetary control, and one that every company of any size has to impose—

Mrs. Harriet Slater: The hon. Gentleman has said that the Government should bring in more control on local authorities—

Mr. Cooper: I have not argued that yet.

Mrs. Slater: —but can he tell us, as a matter of interest, in which departments he would lower the expenditure of local authorities, in view of very high interest rates?

Mr. Cooper: The trouble with hon. Members opposite is that they do not permit one to get on with one's speech. I shall deal with that, if the hon. Lady will be just a little patient—

Mrs. Slater: I cannot tell what is in the hon. Member's mind.

Mr. Loughlin: There is not much.

Mr. Cooper: The hon. Lady would learn if she would just sit down in patience.
I turn now to the nationalised industries. We are spending huge sums on the modernisation of practically every one of them, and we must soon take a good look at that expenditure and see whether we are getting a return for the investment. We all admit that we have to invest a huge sum, but after all that has gone into those industries after all these years we want to know whether we are getting a fair return on the money. Expenditure on the nationalised industries is something that will have to take much more of the time of the House over the next few years than it has in recent years.
The local authorities are having forced on them by virtually every Act of Parliament more and more obligations, and those obligations are very costly. Each of the objects that we ask the local authorities to achieve is desirable in itself. Everyone says that we must have more teachers, more schools, more roads, or that this section or that must have more pay. Whenever we have a debate on roads, each hon. Member rides his hobby horse and tells us how road safety would be improved and lives saved if we took this or that action. So we go on.
As has been said so ofen, everyone is in favour of economy in general, but no one is in favour of it in particular. So the local authorities have all these duties thrust upon them—

Mr. E. G. Willis: What would the hon. Gentleman economise on?

Mr. Cooper: This is not the Scottish Grand Committee.

Mr. Willis: The hon. Gentleman would not get away with this nonsense there.

Mr. Cooper: If I were there, the probability is that I would not be allowed to speak because of the volubility of hon. Members opposite.

Mr. Willis: Not this sort of stuff.

Mr. Cooper: Local authorities throughout the country—and I have had seventeen years' experience of local government—have a tendency to borrow money rather than take it out of revenue


and they are encouraged in this by the Government. Loan periods are laid down for certain types of equipment. For example, a loan is possible for five years for the purchase of a motor car. Loans can be taken over short periods like that and the periods can build up to about sixty years.
Borrowing small sums of money, as many local authorities do, imposes a burden on the rates over a long period ahead. Not only is this intolerable, but, at the same time, it limits the future amount of development a local authority can undertake. My right hon. Friend should seriously consider telling municipal authorities that sums of £2,000 and under must be taken out of revenue. It would be for the Government to say that sums of that amount and below would have to be taken out of revenue, for whatever the items might be, and not out of capital.
The Government should further consider telling local authorities that they cannot borrow for periods as short as five years. The effect of this has been carefully worked out by a number of borough treasurers; that for the first four or five years there would be a greater burden on the rates, but that, thereafter, the burden would fall appreciably. We have reached the stage in our local government finances where we are asking ratepayers to carry too large a share of the burden and we must discover how this can be readjusted in view of the great development that we are imposing on local authorities.
Developments in education will impose burdens which, I fear, many hon. Members do not fully appreciate. In Essex, for example, we shall be extremely seriously handicapped as the years go by. I mention these three points— Government expenditure, the nationalised industries and local authorities—simply to illustrate the enormous demand on our resources that public expenditure is demanding and how, as a result, our outside activities—what can be made available to the taxpayer and ratepayer for his needs—must become reduced unless we really take a hold of this problem of public expenditure.
I very much regret that the Chancellor has not told us what steps the Government are taking to control this enormous build-up. I believe that we have now, in the coming year, one of the greatest

opportunities to develop our exports. All the signs are there. In America, Europe and in the South Americas there is every opportunity for the agile and virile British exporter to go ahead. To impose a bigger demand on our resources now would limit our ability to accept that challenge and it is because I believe that this opportunity exists, and that we can grasp it, that I congratulate my right hon. and learned Friend on his Budget.

7.14 p.m.

Mr. Robert Woof: I feel somewhat gratified to have this opportunity of taking part in this important debate and I hope that the hon. Member for Ilford, South (Mr. Cooper) will not think me discourteous if I do not follow him closely in all the points of special interest which he raised. After listening to the Chancellor's long dissertation today, in which he presented the left side and right side of the nation's balance sheet, it seems quite apparent to me in the early stages of this debate to be faced with the difficulties, either to delve deeply or examine all the details the figures and analyse the position presented to us.
Whatever entities there are and can be seriously argued, I suppose that in many ways it will be substantiated that one indissoluble inter-relation rests on what we are accustomed to accepting to be the practice of Government; to collect compulsory revenue for expenditure that confers a common benefit. But from an altruistic point of view what seems more obviously different from any community faculty is the financial burden imposed on the less fortunate strata of society.
To distinguish intentions from realisations, far be it for me to try to compete with the Chancellor when it comes to financial language. Nevertheless, it seems only right that we should all voice our major criticisms. By looking at certain factors it might be useful to endorse the value of economies derived from the Greek word meaning "household management" in wider terms. For that reason, when we come to consider the country's economy, we realise that it affects a great number of people. To bring the figures more into reality it must be remembered that so many of these people are trying to keep up a decent standard of living.
Whether or not hon. Gentlemen will accept that view, I would remind them that Plato spoke of a society in which there would be men of brass to engage in trade and commerce, men of silver to protect the state and men of gold to provide the political and cultural relationships. If he were living today I am afraid that he would have to go back to school to learn political economy, particularly in view of the rivalries and conflicts in the behaviour of present-day money and the fact that we have such a tough Chancellor of the Exchequer with whom to deal.
As usual, the Chancellor went out of his way to stress that wages must never rise higher than increases in the national productivity. Naturally, we are all deeply concerned about increased production but it is quite a common disposition not to forget the outrageous way in which the Government attempted to interfere with the negotiating machinery which had existed for many years in many industries and professions and which machinery and history resulted in bringing the pay pause policy under heavy fire from many quarters.
Although the Chancellor has induced leading members of the T.U.C. to take part in the National Economic Development Council, the fact remains that if the workers, skilled or unskilled, or professional are to improve or defend their living standards they must also be prepared to battle against any efforts the Government may make to impose greater burdens on them. It will not be surprising, therefore, if, when faced with the sort of economic policies that this Government have entered, these workers are prompted to criticise. After all, they are affected by vitally important domestic issues and there can be no wonder why bitterness and moral indignation can always be found.
The hon. Member for Ilford, South mentioned local Government expenditure. If there can be one example of something which causes anxiety among the workers, nothing has proved more conclusively than has the nightmare of those who are absolutely sick to death of trying to find a home for themselves. Serious repercussions are due primarily to the Government's attitude of continuing the high interest charges to local

authorities for house building, forcing them to confine their housing programmes to slum clearance. I am speaking from my own knowledge and from the experience of having received heartbreaking letters, many of them written in an emotional fashion and some written in a state of panic, in which the writers have expressed the sad conditions in which they live. On investigation I have found the statements in these letters to be quite true.
The evidence can best be seen in the housing situation as it affects the younger people who cannot afford to buy homes of their own. This situation is no accident. It is created by design. Those who buy homes of their own know only too well what the operation of interest rates means. In many instances, contrary to outward appearances of good graces there will remain a heavy debt burden in years to come as a result of encouraging people to undertake mortgages. The majority of people affected cannot remain unperturbed in such a situation. I suppose the hon. Member for Ilford, South is aware of the operations of the Public Works Loan Board as they affect local authority long-term borrowing and the payment of interest. On a £1,600 house the rate of interest over sixty years is 6 per cent. A total of £4,340 in interest would be paid, making a total cost of £5,940.
Many local authorities have been forced, for this reason, to raise rents, through differential rent schemes or other methods, and the rents still go higher and higher. When we consider the shackles that are placed on a person trying to pay off a mortgage on a £2,500 house with repayments at 6½ per cent. over fifteen years, we see that the building society will have received its original loan of £2,500 plus £3,994, making a total of £6,494. To anyone with nothing to fall back upon, and however laborious, such a struggle to shoulder this load of financial responsibility cannot fail to produce profound worry.
In addition, there may be an invitation to irritate people still further in view of what we know of the Government's rerating proposals which are to come into effect next April. Whether the wedge enters the thick or the thin end, in all probability there will be some nasty shocks when tenants


and householders are called upon to pay a bigger share of the local rates, if that should happen, not forgetting that it will mean a further cut in the weekly pay packet, it will be futile for anybody to "belly-ache" about the local authorities. The facts will have to be faced. The blame will have to be placed where it belongs. In these circumstances, one will not need to take refuge in ambiguity of thought and expression. The sum of the situation is that we cannot expect workers not to seek to reimburse themselves with pay increases.
The hon. Member for Ilford, South took my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) to task for referring to the class struggle. I am sorry that the Prime Minister is not present. On 15th December last year, on receiving the freedom of the City of London at the Guildhall, he proudly announced:
It has been a peaceful revolution. The class war is dead, or nearly dead. Almost its only exponents are a few eccentrics.
Everybody may have his own conscientious approach to these matters. In fact there is a very old saying—" He that loses his conscience has nothing left that is worth keeping". However true this may be, even the best of faculties will remain barren without experience. There can be no subjective faculty unless there is something objective to be seen. One cannot have the faculty of vision without seeing things.
There is strong reason to believe that the mass of the people concerned in our productive and distributive activities are becoming cogs in wheels in the great system of human mechanism. But whoever believes that the working class no longer exists in modern industrial society ought to take another look into the financial realities of economic life in which it should be conceded that a good case can only be made if the pungent mark is ignored, and in this respect workers can best judge for themselves. Nobody can possibly relegate all the confusion to a myth and shadow.
In reverting to the question of interest on money lent, this has a long history. It is anterior to rent. For centuries the exaction of interest for money lent was universally denounced as usury and was condemned as anti-social and immoral. Such a practice was frequently punished

by law. Even the Church regarded this method of acquiring riches as most reprehensible, invoking all the torments of hell against greedy and rapacious usurers. Needless to say, nowadays no moral stigma is attached to profit making. The economic system which is dominated by the financial structure of banks and insurance companies is in some circumstances accounted virtuous. Such an indulgence in gain with a craving for more power illustrates how manipulators of finance are looked up to with sophistry.
In view of the grave situation involving interest rates, whether in the form of increased rent or mortgage, one is entitled to remonstrate and to express grievance. There is a spirit of discontent, and this financial weight must be lifted. But there was no indication from the Chancellor that there would be any relaxation. There is evidently going to be no encouragement. I would only add that such profligate audaciousness imposed on a great number of people for the sole behoof of financiers is the price they are paying for Tory freedom.
For a few moments I want to turn to another important aspect. It is to be specially noted that the Chancellor refused this afternoon to detach himself from the long overdue measure to introduce a real capital gains tax. Quite lately it has been hinted at often enough as being dubbed a political tax designed to appease the trade unions and to reconcile them to wage restraint. In view of what we have heard this afternoon about relief in this respect, it will probably be accepted with some rejoicing in the City. But, however divided in purpose, and while not wanting to go into many other implications, I would only say that, let alone in times of crisis, I fully apprehend the Chancellor's task in estimating income and expenditure for the forthcoming financial year.
With this admission, I also take the view that it is not exactly the end of the matter. As in all speculation on human affairs, no one will deny that critical circumstances do demand some sense of personal value and responsibility with a determination of purpose. There is scarcely any good ground for optimism these days. No one can afford to be complacent or indifferent. But I think it may fairly be said for what is to be seen in the light of national importance, whether events denote conditions that


differentiate between one another by changing economic movements, they can equally be applied as an irreducible local concern.
In this connection, and in dealing with the business of the day, the main thing that turns in my mind at the moment is the distinctive trait of individual thought that naturally turns on the consequences of the contraction of industry. I must relate this to the Chancellor's theme of growth and economic expansion.
As economic considerations must be taken into account, I wonder whether the right hon. Gentlemen realises the extraordinary dimensions and depth of the adverse economic transformation prevailing even in my constituency. I offer no apology for having perpetually to repeat that this is due to the submerging of the mining industry and partly also to the fact that the area has never been identified with the endowment of industrial development.
Apart from the inevitable social consequences, in which it is common to conceive anxiety that is pressing so heavily on people—the effect, I admit, is a slow grinding one rather than one of sudden collapse—one can judge from the product of the circumstances the fear which points all the way to a chronic lack of industrial adjustment. The drastic alteration in the industrial and economic state of the area appears to be at the beginning of greater troubles. It cannot be considered as a passing storm arising out of economic conflict, with one expecting it to die down as stability regains its position in the general run of things. It is a situation that must be reckoned with, not so much as what constitutes the preserving of the existing pattern of industry, because before long there will be very little left to preserve. But there can be no mistake about what is now unfolding. What must centre on the immediate future should be the object of offsetting endemic tendencies towards under-employment of the available productive sources through a better distribution of industries. Such an issue ought to be the responsibility of the Government in the scheme of economic development and planning in order to create the means to full production and to sustain the standard of living of all classes.
If we are to take it that the Chancellor means what he says, in seeking to improve efficiency to achieve faster economic growth, then, of course, on the ground to which I have just referred much will be desired in extensive changes to bring about economic success.

7.35 p.m.

Mr. Edward Gardner: I cannot help but be fascinated to hear the references made by the hon. Members for Blaydon (Mr. Woof) and Stoke-on-Trent, South (Mr. Ellis Smith) to the working classes. It used to be easy for anyone to identify the working classes. Indeed, they used to identify themselves, and that was the way it was done. But they do not identify themselves any longer.
Who are the working classes? How does one identify them? I am fairly well acquainted with an industrial area in my constituency—the new town of Basildon—and I have never met anyone there who will say that he or she is a member of the working class. They are members of a community. That is the new approach. What has been said is old-fashioned language which does not apply any more.
One cannot help feeling surprised to hear from the hon. Member for Blaydon this dislike of profit making. I have never heard of any railwayman who is proud of the deficit on the railways. On the other hand, I have known many people who would like to work, and take a pride in working, for firms which are doing well and making a profit. I should have thought that there was nothing at all disreputable about profit making. Indeed, there is something sound, healthy and dynamic about it.
I return to the realties of the debate and to the Budget. I find it a pleasing, if not exciting, Budget. I think that most people will find that they can accept it with satisfaction. I know that parents and no doubt their children may well be displeased by the tax on confectioneries and ice-creams, but I also know—I speak as a parent with two young children—that dentists will be delighted at the discouragement—at least, I hope that it will be discouragement—of the new tax.

Brigadier Sir Otho Prior-Palmer: It will put them out of work.

Mr. Gardner: It may well do so, and I hope so.
One feature of the Budget which delights me and which, I believe, will give pleasure to millions is the fact that we can look forward to the abolition of the Schedule A tax on property.

Mr. Loughlin: That is not in the Budget.

Mr. Gardner: My right hon. and learned Friend the Chancellor of the Exchequer has promised that that is something that we can look forward to next year. The Chancellor is to start on the abolition of Schedule A tax next year. Whether there will be complete abolition next year is something which my right hon. and learned Friend will have to decide at the time.

Mr. Robert Cooke: My hon. and learned Friend is right in what he has so far said about Schedule A, but the Chancellor of the Exchequer, if I heard him aright, referred to owner-occupiers.

Mr. Gardner: I am obliged to my hon. Friend. Perhaps I ought to qualify what I have said by relating it to owner-occupiers. It is on their behalf that I say to right hon. and hon. Members opposite that there will be a good deal of pleasure and satisfaction on this point.

Mr. Loughlin: While I appreciate the type of argument which the hon. and learned Gentleman is advancing, I think that he ought to relate the alleged promise about next year to this Budget. If he cannot do that, he ought not to discuss alleged promises.

Mr. Gardner: This is not an alleged promise. This is a promise given by the Chancellor of the Exchequer. If it means nothing to hon. Members opposite, it certainly means something to this side of the Committee and comes as a great relief. It is an absurd tax. It has always been regarded by hon. Members on this side absurd, and it is quite remarkable that there should be so little enthusiasm for its future abolition by hon. Members opposite.

Mr. Ron Ledger: I am sure that the hon. and learned Member would not want to mislead the Committee. Surely what the Chancellor did was to relate the abolition of this tax

to rating revaluation. He said that he could not see that it would be fair to continue with this tax. Obviously, what he was referring to was that there would be very much more rates to be paid on the part of everyone and that he would not want to charge Schedule A as well.

Mr. Gardner: That is not so. The Chancellor said that he was waiting for the revised rating valuations which would indicate that it was a wholly unsatisfactory tax. There was no question of balancing any increase in rating against Schedule A for owner-occupiers. This was an opportunity next year, when the revised rating valuations would come in, for the Government to revise their approach to Schedule A tax for owner-occupiers. I think that that is right.
I should like to have heard the Chancellor say that he would abolish this tax next year. The point is, and I repeat it without apology, that it is surprising that right hon. and hon. Members opposite, particularly hon. Members of the Liberal Party, should not be showing enthusiasm. There is not one of them here.

Mr. Richard Marsh: They do not come here in the evening.

Mr. Gardner: That is probably right.
Schedule A tax is an absurd tax. It is one which hon. Members on this side have regarded with distaste for years. We believe—I shall be very upset if I find any hon. Member opposite who does not accept this—that people who own their houses have a stake in the country, which gives them a sense of stability, of responsibility and of being a part of the country. I am sure that that is something that we all accept.

Mrs. Slater: May I ask the hon. and learned Member a simple question? An Amendment on Schedule A was tabled on last year's Finance Bill. How many hon. Members on the Government benches voted for it?

Mr. Gardner: I find it very difficult to understand the relevancy of that interruption. The point that I am making, and I hope that it is a valid one, is that here is something which ought to be an attraction to all people who have an interest in making people interested in the country. I believe that to give a person a stake in the country by allowing him on the best terms possible to own his


own property is something that must ultimately benefit the country. I believe it to be one of the greatest and most effective obstacles that we can raise against any threat of Communism.

Mr. Arthur Probert: Since the hon. and learned Member is showing such interest in the owner-occupier, which I thoroughly applaud, would he not agree with the principle of leasehold enfranchisement?

Mr. Gardner: Much as I should like to go into that subject, I certainly do not intend to be drawn away from my main theme. It is simply this. I find in this Budget the theme of equity running throughout it. The Chancellor said that he was trying, and is trying, in this Budget to exercise a broad theme of equity, to bring about a sense of fairness into taxation. One thing that he has done which illustrates what I maintain to be this excellent ambition is to introduce a short-term capital gains tax—a tax which I personally applaud.
I think that there has been in this country a deep and continuing dissatisfaction by many people who feel that distinction in the way that the law treats earned income and the way in which capital gains are treated is something that cannot be tolerated indefinitely. The new tax which is now to be introduced will assuage that dissatisfaction. We are coming nearer to closing the gap, to eliminating and abolishing the distinction between earned income and the accumulation of capital gains.
In 1920, when the Royal Commission on Income Tax reported, it found that there was a discrepancy in our tax system and that short-term capital gains were escaping without any incidence of tax being imposed upon them. Now this gap is being closed, and, I believe, being closed in the only way possible. Apart from short-term capital gains, all the other capital gains which are in the nature of trade are now covered by the tax basis which has been broadened considerably since 1920. I cannot help feeling that this is a tax which will be accepted with satisfaction by the majority of people.
It is a tax that will bring, as the Chancellor has said, a sense of fairness

into our taxation system. I would accept what my hon. Friend the Member for Ilford, South (Mr. Cooper) said about the failure of the Chancellor—it is my only criticism—to make any reference to the containing of Government expenditure. I believe that there is a great deal of disquiet in the country about the feeling—it is a very strong feeling—that the Government are not showing or employing all the will that they might in order to reduce Government expenditure.
Of course, we all know the immensity of the problem. We all know that from time to time everybody wants to spend more money and, in the next breath, wants to save even more money. I would have liked to have heard from my right hon. and learned Friend the Chancellor some reference to the need to restrain Government expenditure. I should also have liked to have heard that he intended to give direct incentives to exporters. I hope that his anticipation that our export trade will be able to match up with the opportunities now being created abroad will be fulfilled.
I believe that the Budget is the basis, and will be the basis, of a new and growing prosperity in this country. I believe that it is a Budget of which this party, and, in particular, my right hon. and learned Friend, can well be proud.

7.50 p.m.

Mr. Ron Ledger: I am sure that the hon. and learned Member for Billericay (Mr. Gardner) will not mind if I do not comment on what he said. I want to make references to what the Chancellor said and to deal with two matters affecting my constituency. One thing which amazes me is that the last three speakers from the benches opposite have referred to the class war, saying either that it is wrong to perpetuate it or that it no longer exists. I cannot see that this is the Government's true attitude, because the Chancellor has put a tax on lollipops and sweets in order to raise £30 million. Is it really true that there was no other way in which he could have raised this sum without letting it bear heavily on people who cannot afford it?
It is only a year since he gave away £80 million to Surtax payers. One would have thought that he could have gone back to them in the present crisis and


that they would have been glad to make a contribution. I have been staggered by the extent to which Members opposite have applauded the Chancellor. Whatever they say about him and his efforts, I do not think that anybody would accuse him of being imaginative.
At present, the Government are negotiating to enter the Common Market and everybody knows that the basis of our economic problem is exports. Therefore, this was a golden opportunity for the Chancellor to introduce the sort of legislation that would have encouraged the expansion of industry and an increase in exports. But I defy anybody to find a relationship between the need to export and 15 per cent. on sweets and 5 per cent. on clothes. It is ridiculous that the Chancellor should come here, in the present economic conditions, and tell us that he must introduce Purchase Tax on goods that have never had it before—including a tax on sweets and lollipops.
I was considerably interested, up to a point, in one important matter raised by the right hon. and learned Gentleman. This was when he spoke of taxing speculative investments. I do not pretend to understand economics very well. As far as I can see, he was making a case that many people are evading tax by certain methods, and that those who invest in speculative investments for quick gains are doing something which he dislikes.
Had hon. Members opposite growled when the Chancellor introduced proposals to deal with this, and had they shown some objection to them, I should have thought that he was being serious. But when I say that they were smiling while he was making these proposals, it was obvious that there was a get-out somewhere, that this would not cost them anything and that he was really saying nothing. After having told us that he would tax these speculative investments, he showed the way out by saying, "If you do not collect for six months, the tax will not apply". I then understood why hon. Members opposite were not at all too displeased with his suggestion.
Nor can I understand why the right hon. and learned Gentleman, in his Budget speeches, does not relate his arguments to some of the problems which exist in industry. I want to refer

to two industries in my constituency to which we could give a little help. I admit that the first one does nothing to help us to increase productivity or to export, but it is involved in a niggling matter about which I know that the Chancellor has received representations. It is certainly time that something was done about it. I refer to the 10 per cent. basic tax which came into force in 1958 and was imposed upon all bets placed on the totalisators in greyhound racing establishments.
There is one of these establishments in my constituency and I have kept fairly closely in touch with this matter. It is obvious that the Chancellor can no longer justify the difference in treatment between those who bet at greyhound racing tracks and those who bet at horse racing tracks. The time has come when he should stop the discrimination and remove this tax from the greyhound racecourses. I have heard the argument that there is a lot of difference between the crowds attending horse racing at Ascot and elsewhere on afternoons during the week and those who attend greyhound races in the evenings. Some have said that this is an unfair tax because greyhound racing is supported by working people. I ask the right hon. and learned Gentleman to consider again whether he cannot remove this discriminatory tax.
My other point does concern exports, through an industry in my constituency—the radio and television industry. It has suffered considerably during the past ten years, particularly as a result of the legislation of the present Government. Since the war, there have been no fewer than eight changes in Purchase Tax upon radios and television sets. This has made it impossible for the industry to plan ahead for any sort of expansion.
Again, the Chancellor showed no imagination today. It is obvious that we are going into the Common Market within a year or two. One would have thought that he would have given all the assistance possible to this industry. There is a tremendous market in Europe for televisions and radios. The industry in my constituency would have been only too prepared to play its full part in seeing that we secured a proper proportion of exports.
The figures show that, whereas in this country four out of five families have television sets, in Europe the ratio is one house in three. That is a considerable market and it is estimated that its potential value in the next ten years is £1,200 million. Securing a large share of that market could do a lot to assist us in increasing exports.
But the sad picture we see as the result of Government legislation in successive Finance Acts is that, during the past eighteen months, production of television sets has gone down by 57 per cent. One reason is that Purchase Tax is much too high. It has been 55 Per cent. and I and my constituents are pleased that this has been reduced to 45 per cent. But it is extraordinary that, in these days, when, in order to be well-informed on day-to-day matters one has to have a television set, it carries a heavier tax than jewellery and furs, on which the tax has been reduced from 27½ per cent. to 25 per cent.

Mr. Gardner: Will the hon. Gentleman explain why one has to have a television set any more than one has to have jewellery?

Mr. Ledger: I am not suggesting that the hon. and learned Member should have a television set. Perhaps he can get no value from the programmes. But everyone in my family has seemed better able to discuss far more matters of general interest as a result of television—but of course, in my family we try to be selective. I cannot advise the hon. and learned Gentleman in that matter. It is entirely up to him. Certainly in my income bracket, there is no selectivity as regards jewellery; we cannot get near jewels anyway.
In my opinion, the television set is no longer a luxury, yet it carries nearly twice the Purchase Tax of jewellery and furs. Therefore, although we welcome the reduction on Purchase Tax on television and radio sets, we think that the Chancellor should have gone a lot further.
A high rate of Purchase Tax on television sets tends to encourage rental arrangements. This has disadvantages in manufacture for export. People connected with the industry know very well that the workmanship which goes into

a rental set does not compare with the workmanship which goes into sets backed by a well-known trade name. It would be sad if, as a result of the Government's policy in encouraging the development of rental schemes and, therefore, the manufacture of substandard sets, by the time we entered the Common Market we had lost a lot of skilled workers and a great deal of the good name of our radio and television industry. I ask the Chancellor, therefore, to consider this point more carefully and to see whether something further could be done.
Another effect of Purchase Tax on radio and television sets is that a manufacturer making for the home market and for export has, almost by necessity, to keep two different production lines. One is for the home market to produce sets carrying Purchase Tax which must be made more cheaply to be saleable at home. If he produces a set for the Continent at, say, £20, a set produced for sale at home at a similar price must take account of a Purchase Tax element of about £7. Therefore, the real value of the set will be less than £14. The manufacturer has to have two production lines in order to produce for export and for the home market, and in this way he is put at a disadvantage as a result of Purchase Tax.
There is the other disadvantage that a television or radio set bought on the home market requires a 20 per cent. deposit on hire purchase, whereas for rental only 10 per cent. is required.
I ask the Chancellor to spare a thought for these matters. The electioneering in his Budget speech was obvious. All hon. Members opposite have referred to Schedule A. The Chancellor made no promise whatever except that Schedule A would be considered at the next Budget, and it was plain that he and hon. Members opposite are far more concerned about pending by-elections than making the changes which are necessary now. They know very well that the Tory Press tomorrow will, in its usual way, have headlines about the abolition of Schedule A and the small print will indicate that this is not a firm promise at all but a possibility for next year's Budget.
If the Chancellor can drag himself away from his obvious electioneering,


he should give a little time to the points which I have raised regarding the problems of industry in my constituency.

8.4 p.m.

Brigadier Sir Otho Prior-Palmer: I agree with what the hon. Member for Romford (Mr. Ledger) said about the export of television sets. There is also the problem caused by the different line systems which militates against our manufacturers and requires them to have two production lines. I hope that the hon. Gentleman will forgive me if I do not follow him further, because I know that many wish to speak and I hope to be brief in what I have to say.
I have spoken to many exporters in recent months and I know that it is not only fiscal assistance which the Treasury or the Government can give to exporters which matters, but it is also administrative assistance throughout all the Departments of Government which matters enormously. Many exporters have said to me that, although they need financial assistance up to a point, what they really want is to be allowed to export. They complain about all the forms which must be filled in and the delays and frustrations which, over and over again, result in the cancellation of orders.
Delay leads to loss, and responsibility for this delay rests fairly and squarely on the permanent officials in the various Departments whose motto appears to be, "Put off for two days what can be done in five minutes". Something really must be done about this if we are to help our exporters to compete abroad and take the opportunities which some people believe will be open to them this year.
At last, after many years when I and others have spoken in Budget debates, something is being done for retired people on fixed incomes. It is something, and for it my constituents, many of whom are such people, will, I hope, be grateful. I am grateful for the little which has been done, though I still believe that the lower limit for relief from Income Tax should be raised higher still for those over 65.
A concession has been given to those under 65 years of age, but I am not really so much interested in them, and I hope that on the Finance Bill we may succeed in having the limit raised for

those over 65 who are living entirely on their savings and who have not had pension schemes of their own because it was not the fashion to have them in their time. They have been hard hit by what has happened to War Loan. They were advised to buy Government stocks, but at their low price they cannot dispose of them and they receive hardly any dividend.
Again and again in Budget debates, it has been said from the Treasury Bench that what really helps these people most is the stabilisation of the cost of living. We should have to halve the cost of living to give them any substantial help. Of course, the cost of living has been stable up to a point, but these people have been hit hard enough by past taxation and what has happened to Government stocks. They watch the big boys, the trade unions and big business, get away with wage rises, salary rises and price rises, always being cushioned against the inflationary consequences by further rises in wages and salaries. They are infuriated when they see this going on. They are unorganised. They have no union to speak for them. They have to sit and suffer.
A new shadow is rising on the horizon to obliterate the pale sunlight of their old age. Each year, by leaps and bounds, rates are rising, based as they are not on capacity to pay but on the sort of house a person occupies. Rates are soaring. It is well known that education is responsible for a very large proportion of the rates they pay. I know that the Government pay for some of it, but I estimate that, on average, about 60 per cent. of our rates are for education. The call on rates for education will increase rapidly during the next few years if we are to keep pace with the country's education needs. The time will come fairly soon, if it has not come already in some cases, when the ratepayer is just unable to pay. I know very well that many of my old constituents in Worthing are no longer capable of meeting any further rises in rates.
It must be realised that there are people trying to live on £180 or £200 a year in their retirement, which is very hard. Something must be done. The majority of people do not pay rates at all. I rang up my county hall this morning, before coming here, to ascertain the


figures. In the West Sussex County Council's area there are 400,000 people, of whom 136,000 pay rates. About a third of them pay rates. I am not talking only of wage earners. Many of those people are earning very good wages and salaries and, perhaps, getting good dividends, but they happen to be living in a house with somebody who pays the rates for them. This, again, hits the aged and the retired.

Mr. Ledger: Who pays the rates for these people? If the hon. Member is referring to people in council houses, I had always understood that their rents included a proportion for the rates.

Sir O. Prior-Palmer: I was not making a point about council houses. I merely say that the householder pays the rates, and that very often a large number of people who live in the houses and do not pay rates earn good wages and enjoy all the amenities of the town or borough, including education, without making any contribution.

Mr. Loughlin: And drawing dividends.

Sir O. Prior-Palmer: Yes. This situation should not be allowed to continue.
The other day, we heard of a council in Carmarthenshire which had got to the stage of saying, "We are not spending more. We must cut somehow on education to keep the rates down". Accordingly, the council sacked 65 teachers. Is that what the country or members on either side of the House of Commons wants? I cannot believe that it is. I learn from an educational magazine that last year the City of Birmingham cut its expenditure on education by £1 million to avoid a rise in rates. I do not know whether there is an hon. Member present from the area who can confirm or deny this.

Mr. Loughlin: The Financial Secretary to the Treasury represents a constituency in the Birmingham area.

Sir O. Prior-Palmer: These are only two examples of what soon, undoubtedly, will be a flood. One council dismisses 65 teachers and a city like Birmingham says that, because the limit has been reached, £1 million must be taken off the education bill.
The Government will be faced with two alternatives. One that they must subsidise education to a greater extent than at present, but I would not be in favour of that. It would merely mean that a local authority would have less say in education in its area and this would be a bad thing, because an authority which does not have financial responsibility does not have the last word. Of my two suggestions, that is the least good.
My main suggestion, which came as a great surprise to my right hon. Friend the Minister of Housing and Local Government when I put it to him the other day, is to set up quickly a committee to examine the question of local income tax, so that people are taxed on their ability to pay and not on the sort of house in which they live. That would be the right thing to do. I hope that the Government will wake up to the seriousness of the situation, which is worsening every minute. Every educationist on a borough or county council knows how serious it is. Possibly, we may get an answer to this suggestion during the remainder of these debates. I might table a proposal during the proceedings on the Finance Bill so that we may get the views also of hon. Members opposite.
I am all in favour of housing subsidies and of subsidising people who cannot afford any other sort of house. What I cannot stand is to see people living in a cellar with no light, no heat, no water and with a family of five while outside a council house not far away stands a Jaguar car. It is known very well that the man owning the Jaguar lives in a council house on rent which is subsidised by the people living in the cellar when he could very well get a house for himself. This is not a question of either Conservative or Socialist policy, but is merely a matter of common sense.
Council houses were not intended for people with Jaguars, big business interests or that sort of thing. It is high time that the Government wielded the stick to local authorities who will not play on this basis and who sometimes get their old boys and their friends into council houses. The Government should say to them, "If you do this sort of thing, you must look elsewhere for the Government subsidy. We will subsidise


only those in need." If somebody who wants accommodation can prove that he is in real need, the ratepayers would not object to helping him, but what happens in some areas is a crying disgrace. There is not a borough or county councillor who does not know this to be true. I hope that the Government will do something about it.

The Financial Secretary to the Treasury (Sir Edward Boyle): I always listen with interest to the criticisms of my hon. and gallant Friend. He is, however, overlooking the Housing Bill of last Session, which made a major change in the system of paying subsidies. It was a tough Measure and one which I would gladly defend. It cannot be said that the Government have neglected the matter.

Sir O. Prior-Palmer: I did not say that they had neglected it. What I say is that still tougher measures are needed. The evil has not yet been eradicated. I remember what was done in the last Budget concerning double taxation benefit to allow able married women to continue at work by raising the exemption limit for Surtax, but it did not go far enough. This, also, is a subject which I have raised time and time again. We are losing our able women teachers and scientists when they marry, because they still cannot afford to go on earning the sort of salary which puts them into a higher taxation bracket so that they are taxed at the highest possible rate, including Surtax, on the first penny they earn. This is a crazy situation and I could give evidence of it.
I am in favour of the tax on sweets and soft drinks and would have suggested it myself if it had not been included in the Budget. In Austria, beer is not taxed, but soft drinks are. I do not suggest that we should go as far as that, but it is absurd that no tax whatever has been culled from either soft drinks or sweets.
I wholeheartedly support my right hon. and learned Friend's proposals to prevent tax evasion. I have pleaded for years for something like this. Honest people are getting sick to death of having to screw up their last penny to pay their rates and taxes while others ten times better off than themselves "get away with murder" over and over again. This

is not a question of whether the prevention of tax evasion is economically sound, or would cost more in administration than the revenue that it would secure. It is simply a question of justice.
People want to feel that justice is being done. If they feel that they are justly treated, then when a crises occurs they can be asked to co-operate wholeheartedly in restraint or whatever else the Government wish them to do. It is no use appealing to people when they feel a sense of injustice and that others are "getting away almost with murder". I hope that these measures will be pushed forward with all the ruthlessness that the Government can exert.
My last point concerns television, on which people pay tax, and the control by the Government of the actions of the B.B.C. Whether this control is too weak, I do not know, but it certainly needs to be tightened. We are getting accustomed to pornography, homosexuality and prostitution, but the latest example on television is blatant blasphemy. Usually, when one writes to the Director-General to complain, he has not seen the line in question. When he has seen it, however, in this case he writes a smug letter saying, "There, there, it was not as bad as all that." This makes one feel quite sick and gives rise to a conviction that all is not well. In our debates on the B.B.C., I hope to be able to enlarge upon this matter.

8.20 p.m.

Mr. Charles Loughlin: I ought to begin by congratulating hon. Members opposite on the adroitness and dexterity with which they have attempted to support the Chancellor of the Exchequer in this Budget debate. Each of them has set up his own Aunt Sallies and has not dealt with the Budget at all. When they have attempted to deal with it, they have spoken of the Chancellor's promises rather than of the Budget's tangible effects and proposals. Each has referred to Schedule A and the Chancellor's promise that next year he will do something about it. But we have had so many promises from right hon. and hon. Members opposite—for instance, about the Offices Bill—and so often has nothing materialised that the Opposition cannot accept the Chancellor's promises as readily as do hon. Members opposite.
All their speeches have had nothing to do with the Budget but with the political advantage to be gained by the reiteration that in formulating his Budget proposals the Chancellor has promised to do something about Schedule A next year. They are trying to say to the people who will be voting in the forthcoming by-elections, "Do not desert us because we will help you next year." Of course they will help them next year, because it is more than likely that next year will be an election year and we can expect to have a Budget very different from this, unless the pattern of Toryism somewhat changes.
The hon. and gallant Member for Worthing (Sir O. Prior-Palmer) spoke of subsidies for council house tenants and he quoted, as Conservative speakers usually do, the council house tenant who has a Jaguar outside his house. I have heard this argument so often that I am amazed that it should be repeated by so many. In our council house development we ought not to be creating ghettos of lower-paid working-class people—and there are still at least a few working-class people left in this country—and we ought not to be creating separate kinds of houses for people who cannot afford anything better.
What we ought to do is the sort of thing which has been done in the City of Birmingham. The Financial Secretary to the Treasury represents the Birmingham constituency of Handsworth. Birmingham's approach to its housing estates ought to be an example to the rest of the country. I lived in Birmingham for fifteen years. Its aim has been to create mixed communities in which at least junior executives—I do not want to stretch the hon. Member's loyalties too much—rub shoulders with fellows who work at the work bench.
Even if a man who lives in a council house has a car outside, is there anything wrong with that? It is not argued that subsidies should cease when a council house tenant does not have a car outside. It arises only when the tenant has a car.

Sir O. Prior-Palmer: Sir O. Prior-Palmer rose—

Mr. Loughlin: I will give way in a moment. I am used to intervening myself, and I should not like the hon.

and gallant Member to think that I am not prepared to give way.
This argument is used only when the council house tenant has a car. If he has been wasting his money on betting, on the football pools, or on buying beer and cigarettes, to the disadvantage of his family, the argument does not arise, but when he has a car it is said that he is not entitled to a subsidy, although his family is then able to enjoy the advantages of having a motor car.

Sir O. Prior-Palmer: I took the example of the motor car as only one example. The hon. Member is putting up a great Aunt Sally, but if he will read my speech tomorrow he will see that I said that people ought to have to prove need before they were given a council house. Of course a council house should be available to a man earning £1,500 or £1,800 a year—provided that all the rest of the people have been properly housed. The hon. Member for Gloucestershire, West (Mr. Loughlin) as a Socialist cannot argue that someone earning £1,500 or £1,800 a year should have a council house if in the next street there is a family living in a cellar and with its name on the council house list for five years, a family with five children and without water and light. Or is that what he is arguing?

Mr. Loughlin: I am merely arguing against the case put up by the hon. and gallant Gentleman.
If we are to apply the principle of paying subsidies solely on the basis of proven need, which is what the hon. and gallant Member is arguing, I will accept that principle if he will totally accept it for the whole of the economy. I have recently been a member of a Standing Committee dealing with a Bill to give subsidies to a section of an industry. There has been no question of proving need on the part of a firm—the biggest monopoly in the industry, which made a profit of £640,000 last year and paid a dividend of 26 per cent.—before it is paid £500,000 of taxpayers' money in subsidies in the forthcoming year. The hon. and gallant Member cannot have it both ways. He cannot say that the council house tenant must prove his need while, without proving need, he agrees to the paying of subsidies to the


biggest monopoly in an industry, a vertical monopoly from production to distribution. He must be a little more consistent. I notice that there is a smirk on the face of the Financial Secretary. Does he dispute what I have just said?

Sir E. Boyle: The hon. Member for Gloucestershire, West (Mr. Loughlin) does get unnecessarily violent in debate. I do not necessarily want to dispute anything, although I was reflecting that the Chancellor announced that the figure for grants and loans for private industry, below the line in the Budget, was substantially going down this year. That was the only thought which was crossing my mind.

Mr. Loughlin: Perhaps I do get excited, but I do not like supercilious smirks when they are not founded on anything. Now to deal with the Budget itself.

Mr. A. P. Costain: Hear, hear.

Mr. Loughlin: The hon. Member says, "Hear, hear ". If I had not spent some time dealing with the hon. and gallant Member's speech, it would have been said that I was running away from it. I had to devote some time to his speech if this was to be a debate.

Sir O. Prior-Palmer: The hon. Member could have learned something from it.

Mr. Loughlin: I might, but I will not be taught by the hon. and gallant Gentleman what I should learn.
I had hoped that the Chancellor's proposals would benefit the economy as a whole. The hon. Member for Ilford, South (Mr. Cooper) talked about exports and referred to our primary task being that of seeing how we could improve our export position. The Chancellor of the Exchequer suggested that the future of our export industry was pretty rosy. I do not know on what information he based his contention. Recently the Federation of British Industries asked firms in all sectors of the export trade to state what they considered to be their prospects for the next six months and the next twelve months. The majority of firms said that the prospects were not very bright, and I should have thought that hon. Gentlemen would have

accepted that if we are to improve our standards of living, or even to maintain them, something must be done about our export trade.
The hon. Member for Ilford also talked about productivity. He said that even if we could increase our productivity by £1,000 million it would make not one iota of difference to our exports. I should have thought that if we increased our productivity, as distinct from production, by £1,000 million this would have made a substantial contribution to our exports, because to some degree the success of our export trade depends on the price at which we can produce goods for the export market, and if productivity can be substantially increased the cost of goods and services is bound to fall.
What contribution will the Budget make to our problem? It does not seem to make any realistic appraisal at all of the difficulties with which we are faced. Is the Budget to cease to be a mechanism for stimulating the economy? Is it to cease to be a mechanism for stimulating exporters to further efforts? I am not criticising our export manufacturers. I think that for far too long they have been working under serious handicaps compared with their competitors. One of the things that I have appreciated recently is the setting up of some form of export credit corporation. This assistance is being provided through the banks and finance houses. I would have preferred the Government to do this at fixed rates below those charged by the banks and finance houses, but the Budget makes no proposals for assisting our manufacturers.
It is very difficult to evaluate correctly some of the proposals outlined by the Chancellor, but it appears to me that this Budget makes no impact at all on the economic problems with which we are faced, and a Budget that fails to do that cannot hope to command the respect of the people.
What does the Budget amount to? It is simply a reshuffle of the pack—nothing else. The only thing it proposes to do is to extend Purchase Tax to kiddies' lollipops, orange juice, and confectionery. Not long ago we spent some time talking about the fireworks Order which imposed a 25 per cent. tax on a


penny banger. Now the Chancellor proposes to put 15 per cent. Purchase Tax on a penny liquorice stick. Hon. Gentlemen opposite may not know what a liquorice stick looks like.

Mr. T. H. H. Skeet: I do not.

Mr. Loughlin: I will tell the hon. Gentleman. I have two children and I take an interest in what they buy. Sometimes they purchase penny liquorice sticks and sometimes penny sherbets. The Chancellor now proposes to impose a 15 per cent. tax on these sweets. The Financial Secretary may be proud of this, because when it was referred to earlier I noted that he was in favour of the proposal. The hon. Gentleman is a bachelor. He can afford to applaud this proposal because he has no kids to consider. This 15 per cent. Purchase Tax on sweets represents the sum total of the imagination and ingenuity of the Chancellor of the Exchequer, who had to drink brandy and water to sustain himself. Hon. Gentlemen opposite are expected to support the Chancellor of the Exchequer for imposing a 15 per cent. tax on children's sweets.
The other proposals in the Budget amount to absolutely nothing. I could spend a long time discussing this capital gains tax. It will not matter two hoots. Very few people indeed will be caught by this tax. The people who will be caught will be the amateurs, not the professionals, and in six months and a day this will be the biggest bolt hole that could ever be devised. Hon. Gentlemen opposite say that this is a wonderful proposal and that they support it. If they are sincere in trying to catch people who are enjoying themselves at the expense of the rest of the community, I hope that during the discussions on the Finance Bill they will support the Amendments that we shall table to widen the scope of this tax.
The same remarks apply to the Schedule A Tax. I hope that when we table Amendments about this tax hon. Gentlemen opposite who now consider this the right step to take will come into the Division Lobby with us to prove their sincerity. However, if experience is any guide, none of them will be there.
The proposals in the Budget are not related to the economic problems of this

country. Let us consider the question of the readjustment of the Purchase Tax percentages. During the Chancellor's speech I said that this was a tax on the newly-weds, and so it will be. The bulk of this reassessment falls on furniture, which is the first essential for any newly married couple. This means that newly-weds will be hit more hardly than any other section of the community. It is no good telling us that they will gain to the extent of a reduction of 2½ per cent. on a carpet if they are going to have to pay a 5 per cent. increase on a bedroom suite. If any section of our community has been hit pretty badly by the Government it is those lads and lasses who are just starting on their married lives. In the past they have been harshly treated in practically every kind of way, including buying a house by way of mortgage.
I do not want hon. Members opposite to repeat what they said during speeches of my hon. Friends a short time ago—about "putting on the water works". I should have thought that this was an opportunity for the Chancellor to do something for the old people. Not one hon. Member opposite has suggested that he ought to have done it. I know that some hon. Members opposite recognise the difficulties with which our old people are faced at present, and I hope that they will voice a little more strongly than they have done in the past their objections to the Chancellor's failure to do something for the old people.
The Budget fails on three counts. It does not seek to deal with the economic situation with which the country is faced; it contains no tangible proposals for social justice, in the sense of giving relief to those who are now living on the borderline of destitution, and it only tinkers with the issue of social reform in the matter of a capital gains tax.

8.42 p.m.

Mr. John Howard: The hon. Member for Gloucestershire, West (Mr. Loughlin) came out with the theme, familiar at Budget time, that further aid should be given to the old-age pensioners. He must know that increases in old-age pensions are given invariably at some time other than at the time of the Budget. Nevertheless, year after year, this sort of discussion is injected into the Budget debate. It is irrelevant,


but it presumably has a certain political value.
The hon. Member gave us his description of the Budget. Other hon. Members have described it as a by-election Budget, but hon. Members on this side of the Committee cannot accept Chat description. There is nothing in it to tempt voters at by-elections, other than the fact that the Government are adhering steadily to the course on which they have embarked, of wage (restraint and realism in our economy. I would have thought that this Budget might ultimately become a "Parkinson's Law" Budget, An that the items of importance have been disregarded by the Opposition, who have fastened on the small items, to which they can apply their minds, such as the imposition of Purchase Tax upon sweets, which will mean an addition of as much as 1½d. in 1s. worth.
I was interested in the hon. Member's advocacy of the differential rent scheme when he was replying to my hon. and gallant Friend the Member for Worthing (Sir O. Prior-Palmer)—

Mr. Loughlin: I know that the hon. Member does not wish to put words into my mouth, or to distort what I said. I did not advocate a differential rent scheme.

Mr. Howard: Not in so many words, but the hon. Member accepted the principle. When reference was made to a Jaguar motor car standing outside a council house the hon. Member agreed that those who can afford to pay an economic rent should do so—and that is the whole basis of the differential rent scheme.
Some confusion seems to have arisen about Schedule A tax. I suppose that we are all relying upon our notes, or our recollections of what my right hon. and learned Friend said. It seemed to me that he referred to this tax because new rating assessments are pending, and he wished to allay any concern that might be felt that these assessments would be applied for the purpose of Schedule A tax. At the same time, he possibly wished to avert a spate of appeals against rating assessments purely because people would be concerned about the amount of Schedule A tax that they might have to pay if this impression was not disabused.
The hon. Member referred to putting down Amendments relating to Schedule A tax. That seems to happen every year. The whole point about the repeal of the Schedule A tax is that it must be related to the structure of the Budget. If the tax were repealed when the Budget has been compiled as it is at present, the result would be that the Budget would be out of balance. Exactly the same considerations applied last year.

Mr. Loughlin: And they will apply next year.

Mr. Howard: Next year is a different matter. If I understood my right hon. and learned Friend correctly, next year he will take the first step towards abolishing the Schedule A tax on owner-occupiers. I hope that we shall abolish the tax altogether. It is a futile form of taxation. People who own a string of houses could just as easily be assessed under Schedule D and there would be some saving effected in the work at the tax offices.
Exports were described as our greatest need and with that I agree. One of the important things about exports is to get the price right. My hon. Friend the Member for Ilford, South (Mr. Cooper) referred to his own efforts to sell goods overseas. It is hard work and a difficult job. Not only must the price be right, but the seller must himself visit the territories where he hopes to sell his goods. It is no use trying to sell through an agent, however good the agent may be. British exporters must be prepared to make use of the introductions provided by agents, or else we cannot hope to achieve the increase in the volume of exports which this country obviously needs.
This Budget is just right in the circumstances. It is designed for a period of transition, when we are moving from the acceptance of certain principles to a situation in which I hope there will be an acceptance of new principles. As was said by my right hon. and learned Friend, we are certainly moving forward with the pressure of consumer demand in mind. There is, therefore, need for room in which to manœuvre, and that my right hon. and learned Friend has retained by keeping the Purchase Tax and Customs


Duty regulators, although he has discarded the possibility of a payroll tax as regulator.
I am sorry that my right hon. and learned Friend has done so, because that regulator was something, even though it was not used, which it was advantageous for him to keep up his sleeve as a possible means of influencing the community. The simplified Purchase Tax structure has been criticised, but, clearly, there is an advantage if the rates of Purchase Tax applying to a whole range of goods are few. They are more easily understood. Admittedly, new commodities have been added to those which fall within the range of Purchase Tax, including soft drinks, ice-cream and sweets. I share with the hon. Member for Gloucestershire, West a liking for liquorice.

Mr. Rankin: Liquorice is not a sweet. It is a medicine.

Mr. Howard: Sweets were the subject of a debate recently when, on behalf of certain dentists, I referred to the considerable disadvantages—(including the spread of dental caries—accruing from eating an excessive number of sweets. I imagine that dentists will applaud this proposal by the Chancellor, even though they may not have the same motives as the Chancellor had in mind in imposing the tax.
I suppose that children will be mainly affected by the tax on sweets. However, some advantages for youth were tucked away at the end of my right hon. and learned Friend's speech. He referred to the release of funds for youth activities. I applaud the fact that he has taken this into account. In my constituency schemes for sporting activities are held up, but I hope that they will now go forward.
At present, the country is in a state of transition from an era of happy-go-lucky wage demands to an era in which steady costs and increases in production are accepted as of paramount importance. My right hon. and learned Friend referred to the National Economic Development Council, on which great hopes are pinned, not only in the House of Commons but throughout the country. I hope, too, that the services of

nurses, medical technicians, civil servants, Post Office engineers and others who give a service to the community will be recognised by those directly involved in production. If uncontrolled wage claims absorb the whole of increased production, it will make nonsense of our cost and economic structure and nothing will be left over for those who render services to the community.
Until it is generally recognised that stoppages at Longbridge, in Birmingham, and one-day strikes in other areas hold up and lose exports, we shall not have made the educational progress which the country needs if it is to move into the new era of the 1960s. These strikes are directly responsible for deferring the day when nurses and others giving service to the community can obtain new pay structures. I hope that this is generally recognised.
The Government have certain other responsibilities in addition to pursuing a policy of restraint, important though that may be. They have responsibilities to those on small fixed incomes and those of advancing years. My right hon. and learned Friend has given some small concessions to those on small fixed incomes and to those who already enjoy a measure of age relief. I know that this is generally supported in the Committee.
At the other end of the scale it has been necessary to take care of the speculator who has been augmenting his income by profits from regular speculations, which have so far escaped tax. As I understand it, the capital gains tax has to tread a difficult course between taxing speculation and deterring genuine long-term investment. Therefore, the distinction between a speculation and an investment must be a matter of the length of time involved. My right hon. and learned Friend has fixed the term at six months for stocks and shares speculation. In the case of land speculation, where, obviously, it may take much longer to find a buyer, he has fixed three years. These two terms are realistic and will reasonably accurately measure the distinction between an investment and a speculation.
I and many of my hon. Friends had feared that my right hon. and learned Friend, in a fit of enthusiasm, would tax


only the profits accruing, but he has been equitable. He intends to allow the losses which may arise from speculation to be taken into account. After all, speculation is a matter of judgment and judgment may not always be accurate. Several hon. Members have made it clear that expansion is the only answer to inflation.
More production is demanded, but, obviously, more production must be in the right direction and particularly in those industries which provide a considerable proportion of our exports. There is clearly a strong influence on the export position if we also help those industries which are savers of sterling as well as earners of sterling. I refer particularly to shipping and shipbuilding. A small concession has been made to shipping which I advocated last year—namely, that the unabsorbed capital allowances which arise in a company which is making a loss from trading can be allowed against other income. I understand from the shipping industry that this is a relief which they, in particular, wished to see.
The possibility of a sales tax as an incentive has been mentioned, but I do not propose to refer to that. I should like to turn to some of the tax reforms which my right hon. and learned Friend instituted. First, he referred to a conference with accountants to see whether it was feasible to replace the present Income Tax and Profits Tax on companies by a single corporation tax. I hope that he will find it possible to devise such a tax and that the difficulties of the opening period of the new tax can be overcome
The Estate Duty proposals are also designed to stop a particularly blatant form of avoidance which arose from purchasing land and property abroad and also mortgages. The country will be pleased to see that this gap has been closed.
There are various other recommendations which have been put to the Chancellor from time to time by professional bodies—in particular, the amalgamation of Income Tax and Surtax and their replacement by a graduated tax. Another possibility is the institution of a system of self-assessment to Income Tax to avoid work in the tax offices. These

have been advocated by reputable professional bodies, and I hope that they are receiving consideration in the Treasury.
Another professional point is that the law relating to Surtax directions on companies is still as vague as it has been for many years. Suggestions have been put forward for a revision in the law, and I thought that my right hon. and learned Friend would have looked at this aspect of taxation law with the object of tightening it, since he proposes to introduce a number of reforms.
The Chancellor has explained his reasons for bringing Schedule A tax to an end. There is, however, an immediate reform which should be considered, and it might be appropriate to put down an Amendment in Committee. It relates to flat dwellers. There is a growing custom in this country to purchase one's fiat, but it is extraordinarily difficult to obtain relief for Schedule A purposes on the contribution which the flat owner has to make to the common upkeep of parts of the building, such as the roof and the external structure generally. I agree that this will become of less importance next year if the whole of Schedule A is abolished, but in the meantime there is an anomaly and an unfairness on flat dwellers. I hope that consideration will be given to removing this defect in Committee.
Much has been said this evening about the owner-occupier. We must all accept that he is a responsible member of the community. He has assumed responsibility for housing his family. He assumes responsibility for repairs, for rates and for the current rate of mortgage interest, to which hon. Members have referred. I am sure that he deserves the lightening of his burden by the removal of the Schedule A tax.

Mr. Douglas Houghton: Is the hon. Gentleman suggesting that the owner-occupier is a more responsible person than the occupier of rented accommodation? Is there some distinction in the matter of responsibility between the owner-occupier and the tenant?

Mr. Howard: I said that the owner-occupier was a responsible member of the community, that he accepted the responsibility of housing his family. I do


not say that he is more or less responsible than someone who has moved into rented property. Quite clearly, each of those people may well have taken the right line towards his personal responsibility. I merely said that the owner-occupier has assumed a greater number of liabilities, such as the direct, as against the indirect, payment of rates—

Mr. Costain: And also in not being subsidised by other members of the community.

Mr. Howard: He has assumed responsibility for rates and mortgage interest, and he has the need to repay his mortgage burdens that do not fall on a tenant—

Mr. George Lawson: The farmer is heavily subsidised. Is it suggested that he is not a responsible member of society?

Mr. Howard: I am sure that the intervention has taken the discussion much wider than was intended. We are not referring to people who are subsidised, but to whether or not the owner-occupier or the tenant is the more responsible member of the community. I think that we came to the conclusion that, in most oases, they were equally responsible, but that the owner-occupier had assumed heavier financial commitments than had the tenant—

Mr. E. Fernyhough: Does not the hon. Gentleman realise that under the 1957 Rent Act there are plenty of tenants who are paying far more than is the owner-occupier for their accommodation, though they rent it and never own it? Are they not responsible citizens?

Mr. Howard: I do not say that they are not responsible citizens. I have tried to make it clear that the owner-occupier has assumed a wider range of financial responsibilities than has someone who is a tenant. Without measuring the rent that someone is paying, the responsibility for immediate outgoings is, perhaps, more difficult to assess.
This is a good Budget and one that has been designed for the circumstances for the day. No concessions have been made because of recent by-election

results. Its policy, particularly in regard to the National Economic Development Council, is right. The Chancellor has, with his customary courage, set a course towards a sound income policy and economic sanity, and I am sure that this Budget will take us further along that road.

9.3 p.m.

Mrs. Harriet Slater: The hon. Member for Southampton, Test (Mr. J. Howard) dwelt at some length on Schedule A, rather pointing out that the owner-occupier takes on greater responsibilities. Perhaps he remembers that his own Government introduced the Rent Act of 1957, under which by way of rent tenants are already paying towards repairs, and that many are not getting them done. I could give the hon. Gentleman numerous cases where the rent has gone up by 6s., 7s., 9s.—even 15s. a week—but where the tenants have a dickens of a job to get their repairs done. Therefore, the people who are unfortunately compelled to live in rented houses also have a heavy responsibility.
It is obvious from our discussion on Schedule A that the Tory Party is out to claim that it is the party that is particularly concerned with those desiring to buy their own houses, but if hon. Members opposite really wanted to help in that way, and really wanted a property-owning democracy, they would make one of their first steps the reduction of interest rates.
One of my hon. Friends gave figures concerning a man setting out to buy a house. They showed that while originally the house might have been said to cost £1,750 or £2,000, by the time he has paid the total amount, including interest, a tremendous sum of extra money is involved. The figures also showed who gets all this extra money and who are making the large incomes. The organisations lending money, including the building societies, are making huge profits.
The main theme of hon. Gentlemen opposite has been that this is a sensible Budget. "It has gone a long way," they are saying. I maintain that it is a standstill Budget—a preparation affair, not for by-elections but for the next General Election. It is a Budget which


contains promises, but they are promises for next year. Not only will one coach and horse be able to get through the proposals to deal with the "dodgers", but for the clever guys a dozen coaches and horses will be able to get through and the "dodges" will remain.
It is the sort of Budget whereby the Chancellor is obviously getting ready for the next General Election so that, this time next year, he will be able to give bigger concessions, thereby persuading, or trying to persuade, the people how clever he is and how good are the Government. A lot has been said about the need to increase production and we all agree with that. We all agree that we must try to export more, because our very lives and standard of living depend on exports. But the Government cannot introduce a Budget today and, by so doing, dispense with the Economic Survey. This document sets out the aims of the economic policy and the foremost aim for 1962 indicates that concessions must be maintained so that exporters in the United Kingdom can take advantage of the opportunities open to them to achieve greater expansion. The Survey points out that this cannot be achieved by Government action alone, but that in two main respects the Government can help. The document states that the Government can:
… regulate the strength of total home demand"—
and I suppose that this Budget regulates the demand of the kids
which would otherwise compete with export demand for… skilled labour..
The following is the significant sentence:
They can also influence the level of incomes and, therefore, the costs of production.
The whole burden of the demand up to now from hon. Gentlemen opposite has been that, somehow, wages must be kept in check. If the Government want to do that I suggest that they should do it fairly and justly. The trouble today—and this is what hon. Gentlemen opposite do not like to hear—is that even though living standards have moved forward greatly in the last 50 to 100 years, there still remain great differences in the standards of living of different people.
We still find those who can afford many luxuries and an expensive way of life

while other folk must live on wages well below the average. How can hon. Gentlemen opposite speak in the way they do when there are men taking home £8 17s. 6d. a week, out of which their wives must run their homes? Do hon. Gentlemen opposite realise that a great number of people are earning less than £10 a week and that they must run their homes and care for their families out of this amount? How can they talk of justice and about keeping wages low when this state of affairs exists? Hon. Gentlemen opposite know jolly well that people at the other end of the income scale spend more in one day than these folk have to live on for a week.
Who are the people to whom the Chancellor has appealed? To what kind of trade unions did he appeal last week to keep wages down? In the main he appealed to those in which the incomes are very low indeed. Take the textile worker, for example. In Leek, which is almost on my doorstep, the textile worker takes home about £9 15s. 6d. A woman takes home from £5 to £6 when she has worked a full week. What justice is there in saying to such people that if we are to export more, their wages must be kept at a low level?
What about the railwaymen? Whenever the Government talk about the railwaymen they always refer to the amount that we are spending on them. Do not forget that it took a war to make private enterprise get any profit out of the railways, when this country had to subsidise them to the tune of £40 million. We are now having to spend money to subsidise the railways because the money was not spent in the pre-war days, and we were left with an out-dated industry with bad rolling stock.
The Chancellor appeals is to the railwaymen, the nurses, and even the teachers, those girls who get £10 a week when they come out of college after three years training. To the nurses the Minister of Health has the impudence to say that they will have to be satisfied with 2½ per cent.—a miserly 6d. in the £. It is to the textile workers and these other lower-paid income groups that the Economic Survey and the speeches of many hon. Members opposite have been directed. There is still not justice in the way in which we deal with these people.

Mr. J. Howard: What about the higher-paid workers? Does not the hon. Lady think that they should participate in wage restraint?

Mrs. Slater: I believe that all workers should participate, but we should not stress the need for restraint among the lower income groups. What did the pay pause do? It saved about 1/10th per cent. of the total wage and salary incomes of this country. What did it do on the other side of the balance sheet? It gave to our people a grave sense of injustice and unfairness. It did not achieve the purpose for which it was designed.
A great deal has also been said about the need to cut down Government expenditure. I was relieved to hear the hon. and gallant Member for Worthing (Sir O. Prior-Palmer) say that he did not want to save money on education. The municipal elections are coming along soon, and on every Tory leaflet throughout the length and breadth of this country we shall read of the need to cut down local government expenditure. In nine cases out of ten education will be mentioned as one of the parts of local authority work where money should be saved. It was, therefore, a great relief to hear the hon. and gallant Member say that he did not believe in cutting down on education. At least he has enough foresight to see that if we want to advance and to become a nation which can measure up to many other nations, we have got to make better use of our brains than we have in the past.
Obviously, local authorities will have a greater burden to bear, and a very large proportion of that burden—I return to the point I made earlier—is influenced considerably by high interest rates. Let us take the example of a school. If we build a school in my city, we have to put an awful lot of material underneath it because of mining subsidence. Because we have to take these precautions, a school costs us a great deal more than it would an authority such as Worthing. In reply to a recent Question I was told that a school which is tendered for at £113,000 will have cost £421,000 by the time my local authority has paid for it. If we borrow money for capital expenditure in any sphere of our local authority work we are imposing on the people a heavy burden

which could be obviated if we had lower interest rates.
The hon. Member for Ilford, South (Mr. Cooper) expressed himself in favour of the Treasury having more controls. He said that he had long experience of local authorities. Does he not know that the Treasury exercises control on local authority spending? That is why there have been cuts in educational building during the last year. It is because of Exchequer control that local authorities have been prevented from doing some very essential work.
The hon. Gentleman suggested that amounts up to £2,000 should be met out of local authority revenue. It is true, of course, that one gets very little for £2,000 these days, very largely because of the very high prices which prevail. For instance, a school requires furniture, or one sets up an old people's home and requires furniture for it. Because of the rise in prices one gets very much less for £2,000 than one used to get. I am sure that local authorities would look with very great disfavour at the hon. Member's suggestion.
If the Government want to keep down the wages of the majority of workpeople and if they want people to recognise their desire that wages and costs should be kept down in order to increase our exports, they must do very much more to control the cost of living. In answer to a Question last week I was told that the £ on the basis of its value in 1951 buys only 15s. 8d. worth of goods today. This is a very important factor to "the old-age pensioners and persons on low incomes, about whom the Tories seem to be very much concerned, and also to the woman who has to buy for a family.
Also, if the Government want some response from the lower-paid people they must do more than they have done to get a response from those who are making large profits and dividends. Last week Whitbreads announced a dividend of 30 per cent., an increase of 3 per cent. over last year. That is more than the increase which the Government think the nurses should have.
I turn now to the changes in Purchase Tax. The tax now brings in more than £606 million a year. It was introduced to restrain people from buying goods, but it has become such a source of


income for the Exchequer that I have no hope of seeing the abolition of Purchase Tax in my lifetime.
In the proposals today there is a further injustice. A person who buys a car—I drive a car—will get a considerable reduction in Purchase Tax, but the poor woman who wants to buy more furniture will have to pay on every £100, £2 17s. 6d. more. On the average car there will be a reduction of £34 tax. I think that it is disgusting that Purchase Tax should go up on furniture and on all clothes, other than children's clothes. It is disgusting that in such an excellent Budget—as hon. Members opposite believe this to be—the Chancellor should have to resort to this very mean business of putting up Purchase Tax on furniture and clothes. It means very much more to the women with an income of under £10 a week to have to pay more for her coat than it does to the person who can buy an expensive coat. It may not be very much more. An hon. Member said that it was about l½d. on something. But every 1½d. mounts up until it becomes a very real burden.
The meanest thing in the Budget is the tax on soft drinks and sweets. Hon. Members opposite may think that this is funny but it is not

Mr. James Dempsey: It is contemptible.

Mrs. Slater: The Home Secretary will go down in history as the Chancellor who introduced the pots and pans Budget because he put up the tax on ordinary household commodities. The present Chancellor will go down in history as the Chancellor who had to tax the children.

Mr. Dempsey: The lollipop Chancellor.

Mrs. Slater: I see no reason why soft drinks should be taxed. We are at the stage when we are regretting the amount of crime and the Home Secretary and the Minister of Transport are concerned that people should not drink more, yet the Government are taxing the very thing that young folk would be very much better drinking than the other stuff that makes them irresponsible.
The only good thing about the proposals is that they will enable more money to be spent on young people. The

question we ask is: how much more money, and how soon will it be before we have legislation on the Albemarle Report introduced?

Mr. Willis: The Government will not spend it on schools.

Mrs. Slater: No, but on playing fields, sport and that kind of thing. How long shall we have to wait before we get action on the Albemarle Report and the Wolfenden Report on sport? The only pleasing part of the Budget is that which deals with youth. I look upon the Budget as mean and miserable. It is a standstill Budget so that the Tories may have more election propaganda at the next General Election.

9.24 p.m.

Mr. David Gibson-Watt: I hope that the Committee will forgive me if I do not follow the hon. Lady the Member fox Stoke-on-Trent, North (Mrs. Slater) back to the schoolroom, because I want to address my remarks to the Budget.
The Budget, as I see it and as it has been described by other hon. Members on this side of the Committee, is fair and reasonable. We have here the Chancellor of the Exchequer in his second term. There are few Chancellor's of any party or any Government who seem to grow younger after they have been at the Treasury for very long. It seems to me that my right hon. and learned Friend does just that.
I cannot help feeling that this Budget should be judged in its context as the second of possibly three. Last year was, perhaps, the first one of the series. This is the second and next year's will be the third. [Interruption.] Members opposite who are talking so much at the moment are generally supposed to be in favour of planning. It may be that, in its wisdom, the Tory Party has found a Chancellor who is prepared to look ahead and to put the finances of the country into some sort of order. That is my hope. This is a non-inflationary Budget, and that is wise. The present time, in view of all the problems that we face, both internally and internationally, would not have been a wise one to reflate in any way.
First. I wish to say something about Purchase Tax. Here again, I look upon


this Budget as part two in the process of changing this very difficult tax, as my right hon. and learned Friend said, in preparation for our entry, perhaps, into the Common Market. I hope that this country will go into the Common Market, provided that the conditions are reasonable to our agriculture and Commonwealth. I believe that the time has come when many of our people should be thinking in that direction and setting their sails accordingly.
The second point I am glad about is the nature of the proposed tax on short gains—a term I use advisedly. It has been wisely framed. It is not extreme. I am glad that it is to be non-retrospective. Tories do not like retrospection. Furthermore, the fact that it allows losses makes dt far more reasonable. But anybody with a knowledge of this country must realise that we are a race of inveterate gamblers.

Mr. Willis: What?

Mr. Gibson-Watt: Inveterate gamblers.

Mr. Willis: That is what ten years of Toryism have done.

Mr. Gibson-Watt: Whichever side of this Committee we are on, we are all fond of gambling. It may well be that the gentlemen who, in the past, have conducted a good deal of gambling in the City may change their place for doing so.
One of the problems we have to face is that of how businesses in this country afford themselves certain privileges in certain ways. I spoke a moment ago of a three-year plan. Last year, my right hon. and learned Friend limited the size of motor car and other expenses which people could claim in their businesses. Again, he spoke words today which show that he has not taken his eyes from this difficult problem.
Many firms conduct their businesses in a proper way and see that their directors' expenses are within reason. Furthermore, they see that business expenses—on lunches, and so on—are kept down to a reasonable size. When one is dealing with people overseas, particularly in international trade, one must not over-look

the fact that business expenses are very much a necessity. This places great responsibility on the chairmen of companies, and I believe that the standard of the best should be copied by all.
The limit for the incidence of Estate Duty is being raised from £3,000 to £4,000. This is wise. Nobody who is as much against Estate Duty as I am could ever accept that the estate of someone who dies worth £3,000 should have to pay Estate Duty. I hope that the Chancellor, in pursuing my idea of a three-year plan, will look at this matter again another year because it must be possible to relieve a great number of Inland Revenue officers of the unremunerative activity involved in this connection. Perhaps we shall be told during the debate how much we can hope to economise in this way.
I come now to the question of Schedule A. I understood my right hon. and learned Friend to say that it was his intention, over the course of, perhaps, two years, to reduce and then to abolish the Schedule A tax on owner-occupied houses. Plainly, this is right. I am sure that hon. Members on both sides in their heart of hearts believe that people who wish to have a stake in the country and own their own houses should be encouraged to do so and should not have to pay this tax. But it was realistic of the Chancellor to say that he could not remove it in one year. To do so would cost well over £50 million.
The Budget that my right hon. and learned Friend produced today does not deal in £50 millions. It is a matter of £2 million off here and £1 million on there. It is that sort of Budget. I commend my right hon. and learned Friend for saying that this will take up to two years. Clearly, the tax has lost any logical basis for its continued existence.
I know that there are people in my constituency who will regret that cider is to be subject to the 15 per cent. tax. We have heard many arguments from the Treasury about this matter and about light cider as against heavy cider. No doubt, we shall have to discuss it on the Finance Bill. But I shall not make such a fuss on behalf of Hereford about cider as some hon. Members have made about the tax on ice-creams and lollies, which, of course, affects all our families.
This is a sensible Budget. It does not immediately fill one with great excitement. It is a Budget which one can chew over. There are points for and against it, and I, for my part, commend it.

9.33 p.m.

Mr. John Rankin: I have now taken part in more than twenty Budget debates. Every one of those Budgets has gone through the same sort of process. When the new Session starts in November and the Chancellor is faced with Questions, he tells us that he cannot anticipate his Budget. By the time Christmas comes, the pot begins to be stirred. After Christmas, things come on to the boil, and before Easter the whole business is worked up and everyone gets into a state of excitement and anticipation, wondering what the right hon. Gentleman will do this time.
This was reflected this afternoon in the massive attendance of hon. Members opposite. I have never known such a splendid turn-out of hon. Members supporting the Government since the last Budget. The place was packed. Never have I heard people praying so fervently as hon. Members opposite did this afternoon—praying, I suppose, that the Chancellor's purse strings would be unloosened. When the Schedule A tax was referred to, off came the top hats, out came the handkerchiefs and a scene of such excitement ensued as would only have been paralleled at White Hart Lane last week had Tottenham Hotspur scored that vital goal. It was all on a promise that Schedule A tax would be removed.

Mr. Dempsey: In two years' time.

Mr. Rankin: Yes, on the eve of the next General Election. The Chancellor evidently had nothing much to give, so he promised something. I am not thrilled about the removal of Schedule A tax, even though I am an owner-occupier. It does not make much difference to the ordinary owner-occupier. It may be that hon. Members opposite live in such huge houses that it will make a great difference to them.
I do not know whether the promise will materialise, because so many Tory promises are forgotten almost as soon as they are uttered. One can go back over quite a period during the Budgets to

which I have referred and find lots of Tory promises of which one never heard again once the Tories were returned to power.
In every one of those Budgets, the problem of exports has arisen. They were the vital topic. We were told that we must increase our exports and that it was a matter of life or death, but in no Budget since 1950 has the visible trade balance produced anything but a deficit, except in one year, 1958, when there was a surplus of £35 million. Apart from that, every Budget since 1950 has given us a deficit on our trading balance. At the end of one long period of deficits, the Tories won an election with the slogan that the country had never had it so good. In other words, we were having a great time on the losses which Tory Budgets showed. We had never had it so good as when, in Budget after Budget, the Tories were serving up deficits.
Another thought that came to me today and which recurred during the speech of the hon. Member for Hereford (Mr. Gibson-Watt) was whether we had heard the last Budget that we will hear in the House of Commons. If what the hon. Member for Hereford said is true and we enter the Common Market, our Budgets will be decided in Brussels and merely sent across here for our approval. The Commission will look after all that.

Mr. Gibson-Watt: I did not say that.

Mr. Rankin: I know. I am saying it as a deduction from what the hon. Member said.

Mr. Dempsey: He did not say anything.

Mr. Rankin: It is not for me to criticise the hon. Member's speech, because he might criticise mine. I do not mind that, but he said that he hoped that we would join the Common Market. If we do, this might be the last Budget we shall ever hear in this place, because our Budgets will come ready made and stamped "Made in Brussels".
On one side we are faced with the prospect of our Budgets being made in Brussels, and on the other with an even greater threat to policy. I have in my hand yesterday's colour section of the Sunday Times. The authority behind this is indisputable. No Tory will dispute the power which promotes the sale


of this part of the Sunday Times. We are told that
In the last ten years the investment of American big business in British industry has nearly trebled. It is now more than ten times what it was before the war and is increasing at an average rate of well over 13½ per cent. annually, getting on for £170 million per year.

Mr. Peter Walker: Jolly good.

Mr. Rankin: Here is a pro-American, a Yankee cousin. It is probably now close to £1,250 million.
More American money is invested in British industry than in any other country except Canada 
and Canada is not thriving on that type of investment.
One British worker in twenty in the manufacturing industries now has an American employer.
Britons never, never shall be slaves—except to the Yankee dollar.
This American take-over bid is a post-war phenomenon 
which, no doubt, the hon. Member for Worcester (Mr. Walker) supports.

Mr. Walker: Will the hon. Member give the other side of the balance sheet and mention that in the past ten years we as a country have invested £2,500 million in American industry?

Mr. Rankin: But the money which we invest in America produces for us only a small fraction of the income which American investment in this country produces for America. This is a take-over bid and no one can tell me that, with the vast stake which America now has in British industry, she will not have an important say in shaping British policy. This is happening now. On one side we shall have the Budget shaped in Brussels, in the Common Market, and on the other side our policy will be shaped by American influence. Money talks. Mr. Roy Thompson told us yesterday that his religious principles will not allow him to lose money. The religious principles of hon. Members opposite will not allow them to miss any opportunity of getting it. They turned out in such huge numbers this afternoon in order to pray for more. Of course they did not get it. They received only a promise.

Mr. Dempsey: The motor car lobby did not do too badly.

Mr. Rankin: I will leave my hon. Friend to develop that point.
We are continually being told that we need more exports. I agree, but we do not want this demand for increased exports to be used as a brake on wages and better conditions for the men who produce the goods for export. This demand has been used in just that way for the past thirteen years.
For the past thirteen years, with the exception of 1958, there has been a deficit on the trading balance, yet the Tories adopted the slogan, "You never had it so good ". What would they have said if we had had a surplus for thirteen years? How did it happen? Our invisibles saved the position. In 1950, with a deficit of £82 million, our invisibles amounted to £417 million. The result was a current balance of £335 million. This was when the Conservatives took over from Labour. This was how they started. Since 1950 the invisible surplus has continued to shrink, and this year it is down to £65 million.
This is the serious aspect of the problem facing the Government. No plan was produced by the Chancellor today for dealing with this steadily deteriorating situation, and the Tories have been cashing in on it. This is the remarkable thing. They have been producing false balance sheets and creating a false background in the minds of people. Instead of calling on all hands to man the ship, the Prime Minister was allowing the crew to play bingo in the forecastle. Nobody knows this better than the Economic Secretary. He is well acquainted with the facts. I am sorry, Sir William, it is no longer bingo; it has been changed to bingola.
What has been happening to our invisible earnings? I am glad that the Budget provides a little assistance for shipping. I am interested in this subject because the people in my constituency depend on shipbuilding for their livelihood. Shipbuilding depends on the amount of shipping required, and since 1959 our earnings from shipping have declined from £624 million to £327 million.
This is a serious picture indeed, and once again the Government have not put


forward any plans for reversing the present trend. I know that some people say that flag discrimination by the United States is making it harder than ever for us to get cargoes into our ships, but there axe others who say that the Government are spending so much of our foreign earnings on military adventures abroad that they are living beyond their income and consuming these earnings before, in effect, they even arrive in this country. We must remember that they are doing this because our policy on defence spreads our forces all over the world. We are paying for that today, in this nondescript lollipop Budget.
Invisible earnings, on interest, profits and dividends have gone down from £698 million to £363 million this year. This fall in income from abroad, either through investment or through earnings, is having a tremendous impact upon the policy upon which the Government are forced to embark. Much has been said about the need for exports. Table 27 in the Economic Survey provides an area analysis of United Kingdom exports. Our exports to Australia and New Zealand have steadily fallen from £375 million in 1957 to £326 million in 1961. I hope that before the debate is concluded the Government will find time to tell us why there has been this fall in our exports to Commonwealth countries. In the case of India, Pakistan and Ceylon the fall in the same period has been from £236 million to £222 million. That is the overall tendency.
The most interesting figures in respect of the non-sterling area are those relating to the Soviet Union and Eastern Europe. There we have increased our exports from £57 million in 1957 to £105 million in 1961. If we add our imports from those areas we find that we are now carrying on a fine trade with these countries, running to over £200 million a year in respect of Russia alone. If we enter the Common Market, however, we must remember that no nation will be permitted to carry on trade with any country east of the Iron Curtain to an extent greater than 5 per cent. of its total trade at the moment. Our trade with these countries represents about 4 per cent. of our total trade.
It seems absurd that the Government and their supporters should be telling us that we must have more exports, while,

at the same time, they are prepared to put into effect policies which will control the level of exports and prevent that level increasing. Particularly is this so in view of the fact that in Scotland we are now faced with greater long-term unemployment than ever before. Yet there are over 200 million people in the Commonwealth area alone, and, when we consider also the trading areas outside Europe, there is a market of more than 1,000 million people waiting for our goods. I do not know whether there was anything humorous in that remark, but what I am saying is true.
We have this great market available while at the same time Stewarts and Lloyds in the division of my hon. Friend the Member for Bothwell (Mr. Timmons) is threatening to close down its works; when Rolls-Royce is paying off 3,000 workers and when Scotland, already overloaded with unemployment, will have to carry her share of the further unemployment which this will cause. The shale oil industry is finished and unemployment continues in Scotland at a rate which is a disgrace, particularly when we are told that this country should be exporting more. All we can create would appear to be jobs in the pipeline. When are those jobs to be released. The pipeline is packed with jobs and the employment exchanges are packed with unemployed workers looking for the jobs which are secreted in the pipeline.
I shall be co-operative; and now enter on my peroration. I am not in any way suggesting, Sir William, that you are an agent in assisting me to return to the seat from which I rose such a very short time ago.
This Budget does not represent a plan because the Government do not know how to make plans. Nor has it a policy because the Government cannot find one—at least they have not revealed one so far. I hope that I have said enough to shake the Government—[Laughter.] Yes, I notice that the Economic Secretary to the Treasury is shaking. Even if he has not been impressed I hope that he will tell the Chancellor what I have said. If the right hon. and learned Gentleman really wants an export policy there are plenty of places to which goods


could be exported, and he will solve for Scotland and the rest of England—[HON. MEMBERS: "Oh."]—

Mr. George Thomas: Scotland is not "the rest of England".

Mr. Rankin: Well, it is most of it.

Mr. Archie Manuel: Mr. Archie Manuel (Central Ayrshire) My hon. Friend means Scotland and the rest of England.

Mr. Rankin: The right hon. and learned Gentleman could solve the problem of unemployment which afflicts both the northern part of England and the whole of Scotland and prevents the export of goods which would mean so much to this country at the present time.

Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. Whitelaw]—put and agreed to.

Report of Resolutions to be received Tomorrow.

Committee also report Progress; to sit again Tomorrow.

Orders of the Day — RAILWAYS (TYNESIDE SERVICES)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Whitelaw.]

10.0 p.m.

Dame Irene Ward: I know that Dr. Beeching, as Chairman of the British Transport Commission, has been given a very difficult job in making the railways pay. I do not think that any of us would want to do other than wish him well in his very unenviable task, but there are certain aspects of this problem to which I wish to direct the attention of the House. Dr. Beeching is obviously a man of great ability, as evidenced by the fact that he attracted a very large salary when he was with I.C.I. and that salary is still payable during his period of office, which is relatively a very short one, as Chairman of the Commission.
I never grudge anyone any amount of money which he is able to earn, but I do mot think that money is everything in life. It is equally important that a man who has a responsible job of great magnitude

should understand human relations and be able to carry out the task he has been directed to perform having regard to the needs of the people over whom he exercises a great deal of influence. He is responsible for their happiness and employment. It is very important to bear this in mind.
Dr. Beeching came to Newcastle-upon-Tyne and made a speech on a non-railway occasion at a luncheon of the National Union of Manufacturers. He then said that, as the electric railways on the north and the south of the Tyne were not paying—we were not given any details—they might well have to be closed. Subsequently, apparently, when he was leaving the luncheon, he said that there was no immediate threat to their survival.
I went to the headquarters of the railways and asked for a text of the speech. I was told that it was not a railway occasion and that, therefore, no text was available. I sent a telegram to Dr. Beeching, asking whether he would be kind enough to send me a copy of the speech to reach me at the House of Commons today, Monday. I did that, not only in the interests of and for the protection of Tyneside, and to ensure that I did not misquote Dr. Beeching, but also in his own interests, because in the small field in which I have operated in industry I have always been under the impression that, if a man makes a very important speech, which has very wide repercussions, there should be a text of his speech. I should have thought that anybody with Dr. Beedhing's experience would know that when a speech goes to the Press there is such a thing as sub-editing.
I now want to read the letter which I received from Dr. Beeching, because I think that it is important that all this should be on the record. The letter says:
Dear Dame Irene,
I did not use a written text when I spoke at Newcastle and cannot, therefore, send you a copy. You do not indicate any particular reason for your present request…
I find that very surprising. As I have said, I should have thought that any responsible man would have had a text of a speech of that nature. It never occurred to me that Dr. Beeching would require me to state why I wanted to see the text.
The letter continues:
but since we seem to continue in some danger of misunderstanding one another, in spite of our correspondence to date, would you care to come and see me so that we can exchange ideas about a number of matters? We might then correspond more comfortably.
I have written to Dr. Beeching and told him that I shall be delighted to invite him to lunch with me at the House of Commons.
I wrote to the Chairman of the North Eastern Area Board, Mr. Summerson, and explained to him how worried I was that there was no text of the speech, and that this unexpected announcement by Dr. Beeching had caused great anxiety on Tyneside. I pointed out that it was extremely alarming for all those people on both sides of the Tyne who earn their living in Newcastle, that we were busy building a £12 million tunnel to improve communications, that we were seeking to attact new industries to the Tyneside and that communications had always proved an obstacle. I said that I thought that it was not fair that a statement of that kind should have been made unless the whole of the facts about the protection of the private citizen had been stated quite clearly by Dr. Beeching at the time that he made his announcement. I understood Mr. Summerson to tell me that if there were no proposals before the appropriate committee they would soon be forthcoming.
I am not very keen on Government Departments. I always like going right to the top. As always, I have great faith in the Prime Minister, and also, because he once represented a seat on the North-East Coast. I wrote to him pointing out what a disastrous thing it would be to us if the proposals to close the electric lines were carried out. I will not argue the merits of the case, because I do not think that that would be fair or right. As usual, the Prime Minister sent my letter straight to my right hon. Friend the Minister of Transport, and I will quote the relevant passage from the Minister's letter to me, because I feel that this, too, should be on record. It was longer and more conclusive than we had heard before.
I should like to point out that my complaint against Dr. Beeching is not that he came to announce his proposal, which the Newcastle Journal described as "kite

flying." I do not think that any responsible chairman of a nationalised undertaking should "kite fly" with the lives and future of people who live in any part of the country, and I feel particularly strongly when it happens to be in my area. I will not quote the whole letter, because I do not think for one moment that any move will be made in regard to these railway lines until the new Transport Bill reaches the Statute Book. I therefore will quote only the part of the letter which deals with the new Bill.
My right hon. Friend writes:
You have referred in your letter to The Times "—
I had written a letter to The Times—
to the provisions of the Transport Bill now before the House. As you there say, it will, under the procedure proposed, still be for the railways to propose closures. They are required by Clause 57 to give notice of any proposed passenger closure and of particulars of any alternative services which it seems to them will be available and any proposals they have for providing or augmenting such alternative services. The Clause goes on to provide the detailed procedure for the consideration of proposed passenger closures by the Consultative Committees. The Committees are required, where any closure is opposed, to report to me direct on the hardship, if any, which they think will be caused. They may make proposals for alleviating that hardship. No closure can be effected until I have consented to it and I may give my consent subject to conditions and also give such directions to the Board as I think fit. Thus, when the Bill becomes law, every opposed closure will need my consent and I can, if I think there is social need, direct the railways to keep passenger services open even though they are uneconomic. Again, they would in effect constitute a charge upon public funds. In your letter you also say quite correctly that Clause 4 of the Bill empowers the railways themselves to provide road transport services where a railway service has been discontinued.
I have written at some length, because I want to confirm your understanding of the position. In short, it is that whilst the railways can propose closure it is for the Committees to examine any hardship involved. From later this year every opposed closure will need my consent and I can direct the railways to provide an alternative service (if they have not arranged to do so as part of the closure proposal), or to keep the railway service going. The interests of users are, therefore, I hope you will agree, very well taken care of.
It is very difficult for a politician to stick his or her neck out. I do not think for one moment that closure will follow from what Dr. Beeching said in Newcastle. There are 38,000 daily commuters, and I do not think that in view


of today's narrow and congested roads it would be possible to put that number of daily commuters on to the roads. At tile same time, it is very important to make the position perfectly clear, as I see it.
I do not think that Dr. Beeching should have come to Newcastle and made a speech of that kind without including in it a statement of the protection there was for the people of the district. If one is to make an alarming staement, it is important to say what the legal position is—or what it will be when the Bill reaches the Statute Book.
I have had a rough assessment made by the Central Transport Consultative Committee of what alternative bus services would be necessary. The Committee says that the closure would involve putting obout 250 double-decker buses on the roads at peak hours. Anybody who knows our part of the country will realise that that would probably block the whole of the traffic on both sides of the Tyne from the coast to Newcastle.
As I have said, I am not unduly worried about the future of our railways provided that we make our objections at the appropriate time, but I still take great exception to the way in which Dr. Beeching came to Newcastle and caused all this anxiety at a time when my community, and the country as a whole, already faces many anxieties—

Commander J. S. Kerans: I think that the point my hon. Friend is trying to make is that not only is Newcastle affected, but areas beyond. The Hartlepools, which I represent, are affected by the statements that my hon. Friend is making.

Dame Irene Ward: I am grateful for my hon. and gallant Friend's intervention, because I am not speaking only for Tyneside.
I now propose to read a letter from the Central Transport Consultative Committee. The whole matter needs clearing up, and I hope that my hon. Friend the Parliamentary Secretary will be able to do so. When I had read the report of Dr. Beeching's speech in the local newspaper I wrote to the Chairman of the Central Transport Consultative

Committee, and received a reply on 22nd March from which I want to quote. First, however, I want to say how grateful I am to that Committee for being so helpful and so outspoken to me. I feel a little apprehensive that, under the new Bill, that Committee will lose its power, and that the closure of lines will be dealt with by the area consultative committees.
The letter states:
I believe that Dr. Beeching, when he was in Newcastle recently, made a speech at a luncheon given by the Northern Branch of the National Association of British Manufacturers at which he said he was concerned by the fact that the electric services to Whitley Bay and South Shields were losing money, and that consideration would have to be given as to the possibility of their withdrawal. But this is just preliminary kite-flying. Dr. Beeching is doing a good deal of this at the moment all over the place; so are other railway officers.
I take great exception to that and I am sure that my hon. and gallant Friend the Member for The Hartlepools (Commander Kerans) would do the same.
The letter continues:
There is no doubt but that a very big programme of line closures is contemplated, but we do not expect it to be announced until the Transport Bill becomes law next July, when as of course you know, the intention is that area consultative committees (not the Central Committee at all) will only be concerned in making a report to the Minister as to the hardship involved by closures, and the best way of obviating it by providing alternative road transport. They will no longer be concerned as they are at present, in advising the Minister whether they think that the closure is justified or not.
As nothing affecting Newcastle is at present before any Committee, and Dr. Beeching has made no firm proposal to close these railways, I do not see what we can do. We cannot prevent Dr. Beeching from making flesh-creeping prophecies!
A post-script to the letter adds:
Since writing the above, I have read your letter to The Times.
While it is, of course, technically true that the Railways Board, under Dr. Beeching, cannot do more than recommend a closure, the closure will take place automatically unless an objection is made within the prescribed period to the area consultative committee, and, as this committee can only report on the hardship involved, the Minister will inevitably give his consent to the closures unless the committee can convince him that the hardship is likely to be so extreme that it cannot be obviated by any less expensive form of transport. Then, and only then, would he withhold his consent. So Dr. Beeching knows he is on a pretty good wicket, and thoughts about any statutory


limitations on his own actions, and the safeguarding of passengers, are not likely to be in the forefront of his mind when he speaks at a public luncheon.
I have put these facts before the House tonight because I want to know if my hon. Friend can say whether, in fact, it is Dr. Beeching's intention, as soon as the Transport Bill reaches the Statute Book, to recommend all these closures up and down the country.
I have carefully read the debates on the Bill in Standing Committee, particularly on Clause 57, and I cannot find very much satisfaction as to the protection which these area committees will have. There is no indication of what final obligation the Government will undertake when these closures, if any, are effected. I can see the advantage of transferring the money which is being lost on the railways to public account. I can see Dr. Beeching's point on this, but it is tremendously important, in view of the anxiety which Dr. Beeching has caused as a result of his coming to Newcastle, that my hon. Friend should say tonight just how far this matter has got, and whether, in July, we will be faced with closures all over the country without the House having a say in the matter.
After all, hon. Members represent the final protection of the people. Dr. Beeching does not protect them—whether or not he is Chairman of the British Transport Commission. It is up to hon. Members to protect the interests of the public. I just want to know exactly what this "kite-flying" gentleman has in mind.

10.19 p.m.

Mr. William Blyton: I fully support the arguments adduced by the hon. Lady the Member for Tynemouth (Dame Irene Ward) on this matter. Dr. Beeching was presented to us as the man who was going to bring our railways back into solvency. One can get a man for much less than £24,000 a year if the only job he is going to do is to closedown branch lines. I thought we were paying £24,000 a year to a man who had sufficient brains to make the railways economic and solvent. To pay a salary of this kind to Dr. Beeching to come to Tyneside and say that he is considering closing the electric lines on both sides of the river is just a bit too bad.
I am a lifelong Tynesider. I live in South Shields, although I represent Houghton-le-Spring. I want to ask the Minister, who represents Dr. Beeching—

The Parliamentary Secretary to the Ministry of Transport (Mr. John Hay): No, I do not

Mr. Blyton: —how is he going to carry on if the branch lines on the South Shields-Newcastle line are closed? How are we going to carry the thousands of people from Newcastle to South Shields? There are not enough buses to take the people there. How are we going to take them from Newcastle to North Shields, to Whitley Bay and to the shipyards at Wallsend?

Commander Kerans: I was there during the war. I should like to know how we are going to get industry into the area if these lines are closed.

Mr. Blyton: I am not arguing about new industries tonight. I am arguing about the present industries. How are we going to get the workmen to work and back again if we close the branch lines on both sides of the Tyne?
My other question is this. Why should this man, who is paid such a fabulous salary of £24,000 a year, come to Tyneside and talk in this fashion. Has he got at the back of his mind the thought that when he gets the necessary powers under the Transport Bill he will close the lines on both sides of the Tyne? We have never had a satisfactory answer to that question.
I say tonight, as a life-long Tynesider, that for Dr. Beeching to come and make a speech of this sort, "off the cuff", as he says, is a bad way for a man of his importance to behave. I hope that the Minister will give us some satisfaction for the £24,000 that we are paying this man, instead of talk about closing branch lines.

10.22 p.m.

Mr. Ernest Popplewell: Whilst I can appreciate the concern of the hon. Member for Tynemouth (Dame Irene Ward) and my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) at the closing of the Tyneside electric services, I would point out that their attack is


directed to the wrong person. Dr. Beeching has been appointed specifically for this purpose. We said that when the appointment was made. The hon. Member for Tynemouth and others should attack the Minister. It is the Ministry, the Government themselves, who by their policy are bringing about this sort of thing.
The final responsibility for closing the line rests not with the Consultative Committee but with the Minister at the moment, and this will be even more so when the Transport Bill becomes law. Up till now the Minister has faithfully accepted every recommendation of the Consultative Committee. The Minister has powers to reject these recommendations.

Mr. Hay: Mr. Hay indicated dissent.

Mr. Popplewell: It is no use the Parliamentary Secretary shaking his head. There was only one instance in which the Government refused, and ultimately the Minister agreed with the original proposition of the Consultative Committee. The Minister sent me a letter to this effect.
The main attack should be not on Dr. Beeching but on Government policy that is deliberately bringing about this state of affairs and is causing our railway system to require a national subsidy of £850 million, whereas not only was it able to pay all its interest charges but it was able to make a profit before this bungling Government took over and brought about this shocking state of affairs.

10.25 p.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. John Hay): My hon. Friend the Member for Tynemouth (Dame Irene Ward) began this short debate by saying that she appreciated that Dr. Beeching had a very difficult job to do. I think that after this debate most hon. Members will realise just how difficult that job is.
As I understand it—and I am not responsible for Dr. Beeching, contrary to what the hon. Member for Houghton-le-Spring (Mr. Blyton) thought—

Mr. Blyton: The hon. Gentleman appointed him.

Mr. Hay: No, I did not. Whether my right hon. Friend appointed him or not, he is not responsible for Dr. Beeching in the sense in which the hon. Gentleman used the expression.
In any event, what has happened has been that Dr. Beeching went to the luncheon on Tyneside and made a speech to the members assembled about his job, and he placed what I can only consider as some home truths before his audience. I think that if one reads what Press reports there are of the speech one is bound to conclude that he was talking nothing more nor less than plain common sense.
There is one thing which has not been said tonight, and it is one thing which was certainly mentioned by Dr. Beeching, and that is the astronomical deficit which the British Transport Commission is running at present. It is all very well for hon. Members to talk as they have done tonight, and to point to the difficulties that there will be if various services are withdrawn, but no one has yet said how it is possible to go on running the railways and expecting them to run on a viable basis if they are to go on losing, as they do now, £151 million a year.
This is a very big sum indeed. The job of my right hon. and learned Friend the Chancellor of the Exchequer, who was at the Dispatch Box earlier today, would have been much easier for the coming year if he had not been faced with the prospect of a substantial deficit on the part of the Commission, requiring a great deal of money from the taxpayers.
One other thing which Dr. Beeching appears to have said in his speech and which I must repeat is that at present the passenger services of the Commission lose about £40 million a year. If one can quote from what he said as reported in the Newcastle Evening Chronicle on 15th March, the date of the lunch, apparently he said:
The population are moving away from the railways to the roads—private transport and bus services. This is a process we cannot reverse any more than we can go back to the stage coach. It is possible that we shall have to close these services.
He was referring to the Tyneside services.
But, as my hon. Friend the Member for Tynemouth said, before leaving Newcastle Dr. Beeching was reported in the Press as having added:
There is no immediate threat to these lines, but their closure at some time in the future must be considered very seriously.
If one reads, as I have not time to do tonight, the very full statement that was published in The Times of the following day, 16th March, one gets the matter in a much better perspective, because it is quite apparent from that that Dr. Beeching's speech at Newcastle was directed, as I said just now, to putting before his audience some of the home truths about the railway situation and emphasising the fact that we are living in a situation where people are voluntarily leaving the railways and either transferring their custom to buses on the roads or using their own methods of private transport, thus creating a very acute problem for the railways.
Having said that, Dr. Beeching went on to point out that it is inevitable that the railway services must contract. The Government have often said in this House—I myself have said it at the Dispatch Box in a number of debates—that we just cannot go on maintaining in Britain in the middle of the twentieth

century a railway system which was put down a hundred years ago when there were virtually no roads to speak of and there was certainly nothing like the motorised transport that we have today.
This is the plain, simple fact. It is inevitable that there must be restrictions and reductions in services for the plain and simple reason that people have already indicated that they do not want the services by deserting the railways in increasing numbers over the years.
I am not saying that the Tyneside services are going to be cut, because there is no proposal yet to cut them. As and when a proposal is made—if it is made—then it will be put through the consultative machinery in the normal way, as my right hon. Friend said in the letter to my hon. Friend the Member for Tynemouth which she herself quoted. Unless and until that happens, my right hon. Friend has no responsibility in this matter.

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at half-past Ten o'clock.